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The New Administrative Capital—a real estate project and seat of government - Daily News Egypt

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The New Administrative Capital—a real estate project and seat of government

The new administrative capital is one of the most prominent projects of the current regime. And it is one that sees continuous oversight by the presidency since it was announced at the economic summit in Sharm el-Sheikh in March 2015. The project witnessed several changes, which were supposed to be developed by the government in …


The new administrative capital is one of the most prominent projects of the current regime. And it is one that sees continuous oversight by the presidency since it was announced at the economic summit in Sharm el-Sheikh in March 2015.

The project witnessed several changes, which were supposed to be developed by the government in partnership with the UAE businessman Mohammed Alabbar. A memorandum of understanding was signed for the development of the project, but disagreements over the terms of the partnership stopped the memorandum from materializing into a final contract.

The state decided to develop the project through an Egyptian joint stock company in partnership between the armed forces and the New Urban Communities Authority (NUCA) and started implementing the government district and the residential district. The first phase of the investment lands was offered, while the government is now preparing to offer residential units to individuals.

The new administrative capital is located in the area between the Cairo-Suez and Cairo—Ain Sokhna roads just east of the regional ring road. This is roughly 60 km from the cities of Suez and Ain Sokhna.

The story of the new capital from Sadat to Sisi

The idea of creating a new capital instead of Cairo first emerged in the era of former president Anwar Sadat, who sought to transfer the whole capital to a city with his name on it just on the outskirts of Menoufia. Cairo remained the same and Sadat became a just another NUCA city.

In the years of former President Hosni Mubarak, the men of the dissolved National Democratic Party (NDP) policy committee tried to establish a new capital east of Cairo. After the announcement of the project, it was stopped by presidential instructions for fear of transferring important state institutions to a position that will be difficult to control.

Before the economic summit in March 2015 in Sharm el-Sheikh, the Ministry of Housing announced a plan to establish a new administrative capital. During the conference, a memorandum of understanding was signed between the Egyptian government and the Emirati businessman Mohammed Al-Abbar to establish the capital. Television screens broadcasted his discussion with Al-Sisi, who insisted on cutting the implementation time from 10 to three years only.

The discussions between the Ministry of Housing and Alabbar failed to reach a formula for understanding, due to disagreement over the state’s stake in the project and the mechanism of funding for implementation that the government insists on collecting from abroad.

Despite the announcement of the establishment of Capital City Partners Company to implement the project in partnership between Alabbar and a number of Emirati businessmen, in addition to granting the company Eagle Hills, which is headed by Alabbar, the role of the developer of the project, the agreement was not completed and the state turned to develop the project through a joint stock company between the armed forces and NUCA.

How to go to the new administrative capital?

The government has chosen a site on the border of Badr city, which is about 60 km from the heart of Cairo to implement the new administrative capital project.

In order to reach the capital from Cairo, you must take the Suez road through Madinaty, Al Rehab, and Future City to reach the Jandali 2 road which leads to the project’s site.

Jandali 2 road branches from the main Suez road. It begins with a toll gate run by the National Roads Company of the Ministry of Defence. Toll charges are collected from the cars heading to the project site at a flat rate of EGP 10.

The road itself is only 10 meters wide. It is paved with a surface layer and used by cars in both directions. It passes within the desert of the project to reach the different sites of companies operating in the new administrative capital.

Those responsible for the project site confirmed that the road is only a temporary road until the completion of the road of Mohammed bin Zayed, which connects the administrative capital to New Cairo. The new road will be divided into a northern part extending over 12 km and a southern part with the same length. Its width is expected to be 124 meters.

Part of bin Zayed is a bridge that passes through the regional ring road to connect the northern part to the southern one. The length of the northern part is 160 meters and 74 meters wide, while the southern part is 160 meters long and 67 meters wide.

The road works at the Mohammed Bin Zayed Axis includes the implementation of interconnections with diameters of 2,500 mm and electricity and communication interconnections with diameters of diameters of 110 mm, as well as 9 tunnels in the southern and northern parts to facilitate passage between the two administrative capital districts.

 

Who finances the implementation of the project?

 

The negotiations between the Egyptian government and the UAE businessman Mohammed Alabbar have stopped following the latter’s request to provide part of the funding necessary for the development of the first phase of the capital of $45bn from Egyptian banks.

However, the government rejected and confirmed that the memorandum of understanding signed by the Minister of Housing with Al-Abar in Sharm El-Sheikh requires the UAE investor to provide the cost of financing from abroad to benefit from increased foreign investment rates and not to finance the project from the Egyptian banking sector which suffers from a deficit in dollar liquidity.

During last year, NUCA began implementing the first stage of the capital on an area of 3,130 feddans, which includes the governmental, residential, and business districts.

NUCA spent EGP 6bn in the past fiscal year to implement the facilities and housing units.

Housing Ministry sources told Daily News Egypt that NUCA allocated EGP 8bn in the current fiscal year to complete the facilities of the urgent phase in the administrative capital and the implementation of housing units that are being prepared for sale.

The source added that construction companies will be finished in the middle of 2018 from linking the 3,130 feddans to utilities and facilities.

The cabinet issued an order of attribution to four construction companies to link 40,000 feddans in the first phase of the project to facilities. This began with 3,130 feddans. This includes 1,130 feddans tasked to the Holding Company For Construction & Development (HCCD), 740 feddans to the alliance of Orascom and Hassan Allam’s sons, 710 feddans to Concorde Contracting, and 500 feddans to the Arab Contractors Company.

The sources pointed out that the Arab Contractors, Talaat Moustafa Group, Petrojet, Concord, HCCD, Wady El-Nile Contracting & Real Estate Investments Co., and the military works department will complete implementation of 25,000 units in the residential district of 1,000 feddans before the end of 2018.

The sources also said that the investment of NUCA in the capital last year amounted to EGP 6bn, which adds up to EGP 14bn by the end of the current fiscal year.

For his part, the UAE businessman Mohammed Alabbar, chairman of Emaar Properties Group, plans to implement projects in the new administrative capital east of Cairo after about two and a half years of the memorandum of understanding he signed with the Egyptian government to develop the capital in March  2015.

Minister of International Cooperation and Investment, Sahar Nasr, met Alabbar, who expressed his willingness to increase investments in Egypt in the coming period, amid the government’s efforts to offer many projects for investors, including the New Administrative Capital, according to a statement issued by the ministry.

Alabbar said during his meeting with Nasr that he wants to inject new investments in the administrative capital and the new Alamein and set up a number of new projects in Cairo and South Sinai, stressing his keenness to support the Egyptian economy and contribute to providing employment opportunities for young people.

 

How does the state manage the administrative capital?

 

The Egyptian government established the Administrative Capital for Urban Development—an Egyptian joint stock company, subject to the Investment Law No. 8 for the year 1997 to manage the project. The company held its first meeting with all its members and its bodies on 8 May 2016.

The board of directors of the company was formed from 13 members, including 3 NUCA representatives, 6 experts, and 4 armed forces representatives.

The board includes Head of armed forces engineering authority, Kamel Al-Wazir, Major General Amir Sayed Ahmed, Advisor to the Minister of Defence for Projects, Major General Mustafa Amin Ali, Director of the National Service Products Organization (NASPO), Brigadier General Mohammad Abdullatif, Advisor to the Engineering Authority and former Governor of Damietta.

This is in addition to Deputy Minister of Housing for Technical Affairs, Khaled Abbas, Asem Al-Jazzar, Chairman of the General Authority for Urban Planning, Randa Al-Menshawi, First Undersecretary of the Ministry of Housing, and NUCA members.

Moreover, the board includes Adel Al Morsy, Assistant Minister of Defence for Legal Affairs, Ayman Ismael, Chairman of the Board of Directors and CEO of Dar Al Mimar Group for Real Estate Investment, Tarek Al Jamal, Chairman of Redcon, Lobna Helal, deputy Governor of the Central Bank of Egypt, Nidal Al Qasim, CEO of the Egyptian Gulf Bank, and Khalid Hijazi, faculty member of a University, as experts.

Ayman Ismail was chosen as the non-executive chairman of the Board of Directors and Major General Mohamed Abdullatif as the company’s managing director. Recently, Major General Ahmad Zaki Abdeen was appointed as Chairman and Managing Director of the Company.

The paid up capital of the company amounts to EGP 6bn, including contributions from NUCA and the armed forces.

What is the return received by the state from the capital?

The first offering of investment land in the administrative capital has achieved sales of EGP 10bn from seven plots with a total area of 950 feddans, after 10 companies presented 13 offers to compete on 9 plots.

The first offering included 15 land plots with a total area of 1,500 feddans, including one land of 500 feddans, and other plots with areas of 100 and 200 feddans, next to plots of 50 and 70 feddans designated for the integrated urban activity with special structural requirements, including increase the height of buildings to a ground floor and 7 more floors.

The administrative capital stipulated that the bidder should be an existing company with experience in the field, or a company under incorporation linked to an existing company, provided that it is established within one month from the date of attribution.

The Supreme Council for Investment agreed to put the land in the administrative capital and the cities of East Port Said, Al Alamain, Galala, and new Ismailia with a discount rate of 25% from the specified pricing, for three months from the date of placement.

The administrative capital company aims to offer a number of land plots in the capital with a total area of 1,000 feddans for commercial, administrative and service use.

Housing Ministry sources told Daily News Egypt that the company completed setting the area of 1,000 feddans ready for offering and is now being divided to determine the final number of land plots according to the targeted investment activities.

The sources added that the new offering includes a number of structural and construction features where the height reaches 30 floors. There will also be an appropriate period of time for the development of projects according to the area of each land piece while the ministerial decisions will be sped up to enable the participants to start marketing projects that they will develop.

Moreover, the source said that the activities will include commercial, administrative and recreational centres adding that there are studies regarding offering larger land plots to implement malls on large areas involving various activities.

The pricing committees of the company are also pricing the square kilometre in the first offering in the residential district of the capital.

The company is equipped to put up about 17,000 units in the first residential district in the administrative capital. Preliminary estimates showed that the price per square meter exceeded EGP 7,000, while sales are expected to reach EGP 15bn.

Government sources told Daily News Egypt that the company has yet to decide the final price per square meter, and the booklets are due to be submitted this month.

They added that the committees formed to determine the price of the meter have put estimates beyond EGP 7,000 and could be increased in distinctive locations to reach EGP 8,000.

The sources pointed out that the estimates set by the company during the last year at the start of implementation amounted to about EGP 5,000 per meter, where the cost of implementation was about EGP 3,200 according to an agreement with construction companies.

Furthermore, the source said that prices have risen significantly following the economic reform decisions and construction companies called on to increase the price of implementation per square meter to EGP 5,000.

He said that the company is preparing a booklet with the conditions of the offering, which will include the value of down payment, the mechanism of awarding, and the loan repayment period, which could extend to 5 years while delivering units is expected to be completed within the first half of next year.

Sources added that the expected sales revenues of the first offering will reach about EGP 15bn, which will be channelled to complete the first stage of the project of 12,500 feddans.

The Ministry of Housing announced the launch of an advertising campaign within days to promote the apartments and villas in the capital.

 

The government moves to its new headquarters

The administrative capital will include a government district in an area of approx 1,000 feddans with a building area of 1.2m sqm. This is being implemented through Egyptian construction companies.

A new palace for the presidency, a cabinet building and another for the parliament are to be established along with 18 headquarters of the ministries.

Major General Mohammed Abdullatif, General Manager of the New Administrative Capital Company, said that the area of the buildings that will be implemented in the government district will reach 1.2m sqm.

He told Daily News Egypt that the company used Egyptian contracting companies to implement the government district.

The company has also decided to entrust the implementation of the government district in the capital to the Egyptian contracting companies and the cancellation of the memorandum of understanding signed previously with the Chinese company (CSCEC)

In August 2016, the company signed an agreement of intent with CSCEC to implement the government district, following the signing of a memorandum of understanding in March of the same year through Chinese funding of $3bn.

Ayman Ismail, Chairman of the Board of Directors of the company, said that no final agreement was reached with the CSCEC company regarding the district and that it will be implemented through Egyptian construction companies.

“There was no final agreement satisfactory to the parties on the price of implementation per square meter, and the final and lowest price was presented by Egyptian constructions companies,” he said.

Ismail added that the Chinese company did not complete its executive apparatus in Egypt and would rely on Egyptian contracting companies, which raised the value of its offer, from negotiating directly with the Egyptian contracting companies, and thus will rely on the implementation of the government district on the Egyptian construction companies in general.

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