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ARDIC-Polaris to establish company to follow up development of 5.5m sqm in Suez Canal area - Daily News Egypt

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ARDIC-Polaris to establish company to follow up development of 5.5m sqm in Suez Canal area

The new Suez Canal project is divided into 6 phases over 3 years maximum

The alliance of ARDIC for Real Estate Development and Investments, Polaris Al Zamil Industrial Park (PZIP), and SIAC Holding is working on establishing a new company within the next six months. The new entity would follow up on building facilities on a 5.5m sqm are in the Suez Canal region.

Bassil Shaera, deputy general manager of Polaris International Industrial Parks – an industrial developer – said that PZIP has launched an alliance with ARDIC, SIAC, and businessperson Mohamed Qasem to develop 5.5m sqm in the Suez Canal economic zone, in partnership with the General Authority for the Suez Canal Economic Zone (SCZone).

In an interview with Daily News Egypt, Shaera said the alliance aims to attract about $3.5bn of investments over 15 years, and the required land for the project was allocated on an usufruct system for 50 years.

Why do you intend to establish a new company?

The new company will contribute to the management and follow up on the development, construction, and building of facilities in the 5.5m sqm allocated to the alliance in the Suez Canal area.
What is the timeline of the project?
According to the contract, we will receive the land from the SCZone within six months. The alliance will complete some technical procedures to obtain the land during this period.

The project is divided into six phases, each one covers about 1m sqm. The entire project will be completed within 18 years. The building of facilities in each phase will take a maximum of three years, and six more years until we sell to investors.

Which system was the contract signed based on?

The contract is based on revenue share, as the SCZone will take a share of revenues of the sale of lands to investors.

The Ministry of Industry has withdrawn 4,700 plots of land from non-committed investors.

Has the company also withdrawn land from investors in the area?

I cannot say that the company “withdrew” lands but it actually “recovered” about 150,000 sqm from investors in the areas of “Polaris” and “Polaris Al Zamil”, due to changes in investment plans of the participating companies following the recent economic reforms.

The industrial developer companies are flexible in dealing with investors. They take into regard the situation of investors and any obstacles facing their projects, especially after the recent economic reforms adopted by the government.

The company contacts the troubled investors to reach a settlement and recover the land without imposing fines on them.

Info Graph by Daily News Egypt

What are the company’s plans for the recovered land?

The company will offer the land to investors again at new prices.

Will the company raise the price of the recovered land?

Of course, the company started to sell its lands to investors at EGP 200 per sqm in 2007, while it reached EGP 1,200-1,400 per sqm in the past two years.

How many plots of land has your company received in 2007?
Polaris group acquired 3.1m sqm in the industrial development zone in the Sixth of October City, including 2m sqm for Polaris International and 1.1m sqm for Polaris Al Zamil.

How many companies operate under the Polaris Group?
It has about 60 companies, and attracted investments worth EGP 20bn in its two regions.
Polaris’ policy focuses on attracting major local and foreign companies operating in the local market, rather than a large number of small companies.

What are the most prominent companies operating in Polaris’ areas?

Polaris has succeeded in attracting a number of major companies, including Procter and Gamble Company (P&G), a factory of which was built on an area of 260,000 sqm; Schlumberger oilfield services company, whose factory was built on an area of 100,000 sqm in the Al Zamil Polaris area; a Mansour Chevrolet production line on an area of 55,000 sqm; Henkel for the manufacture of gel detergents; Edita Food Industries; some pharmaceutical companies, such as Horus Pharma, Scib Paints; and other companies.

Why does the area not include cement or ceramic plants?

From the very beginning, Polaris adopted an environmentally friendly system and we have no place for polluting industries. We rejected investment applications from ceramic, fertiliser, and cement companies. We also refused to rent a plot of land for a cement mixer, although the investors of these projects presented attractive offers.

Does your company rely on new and renewable energy resources?

The company has relied on new and renewable energy since 2007. We built 1,420 lighting columns run by solar power.

What is your company’s role in developing small and medium-sized enterprises (SMEs)?

The company always believes in the importance of SMEs. We are now preparing to launch the “Busla” project during the current month. It will be a ready-built complex on an area of 55,000 sqm in the Polaris Al-Zamil area. It will consist of 56 units for various industries, with areas ranging between 400 sqm and 700 sqm, at EGP 7,000 per sqm. The average price of units is EGP 3.5m.

What is the main purpose of establishing the “Busla” complex?

My company aims to support SMEs through its new project, that will allow the chance for integration with existing large factories within the industrial zone to manufacture production requirements and reduce imports.

So the company seeks to acquire more lands in the next industrial development proposals, so as to expand in the establishment of such complexes.

In October, the Industrial Development Authority (IDA) offered 8m sqm to investors on an industrial development system.

Did your company participate in the tender?

Of course, the Polaris Group presented technical and financial offers to the IDA on 21 November to obtain new land in the latest proposals, including 1.4m sqm in Sadat City.

What is the difference between the latest industrial development proposals and the first offering in 2007?

There are no major differences between the two offerings. However, the IDA became more experienced in technical and supervisory aspects of offering new land, which was reflected in the new conditions booklet.

Do you think the IDA delayed offering lands on the industrial development system?

Yes, the first offering was in 2007. This delay was not in favour of anyone, whether the developer, investor, or the state. I believe the offering should rely on supply and demand.

How does Polaris follow up the maintenance of its zones?

Polaris has established a specialised industrial zone management company, that operates and manages its two zones, in terms of security services, agriculture, cleaning, and road maintenance.

What are the most important problems facing investors in the region?
The most important problem facing investors in the region, and the company in general, is the transfer of ownership of the plant from the government to companies.

Polaris has not yet finished transferring the ownership of some factories to its new owners because of bureaucracy.

The industrial development’s land in the Sixth of October belongs to the New Urban Communities Authority (NUCA). The IDA was delegated based on a cooperation protocol to sell the land to developers who would in turn sell it to investors. So the ownership of land must be transferred to the final investor after he pays all his dues.

Have you contacted the government to resolve these problems?

The Ministry of Housing and the NUCA currently work on solving this problem. They aim to delegate the IDA to allocate lands to investors.
Following the economic reforms adopted by Egypt at the end of 2016, what are your expectations for the investment climate next year?

The next year is expected to witness a flow of foreign investment after one year of applying the economic reforms, including the flotation of the exchange rate, cutting energy subsidies, and issuing new legislative and economic decisions in 2017. I believe investors evaluated the economic reforms very well and made their decisions, the results of which will appear in 2018.

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