Egypt's Prime Minister Sherif Ismail approved on Saturday the start of a project to tear down and rebuild the Cairo slum area known as the Maspero triangle, despite complaints by local residents that they will not be able to afford to remain in their homes after development is complete.
The project will cost an estimated EGP 4 billion, Ahram Arabic news website reported.
A set of compensation options for local residents has also been approved, which include relocation, remaining in the area at an increased cost, or receiving cash compensation.
The approval came during a meeting of the Higher Council of Planning and Urban Development headed by Ismail and attended by the ministers of housing, culture, environment, agriculture, local development, as well as the governor of Cairo.
Egypt's housing ministry began last week to survey residents for their preferred method of compensation.
The government has been planning for years to develop the area into an investment and residential hub.
The government has listed five methods of compensation for locals in return for their homes, which will be demolished and replaced with commercial and residential buildings over three years.
These options include: leasing an apartment in the area after development is complete, to be owned after 30 years; renting a home in the area; buying a home in the area; receiving a one-time financial compensation of EGP 100,000; or relocating to El-Asmarat neighbourhood in Muqattam district.
The Maspero triangle, in the old Boulaq neighbourhood by the Nile, is home to countless small workshops. It neighbours deluxe shopping malls and five-star hotels along the Nile Corniche
The area, which was given its name because of its triangle shape on the map, stands on 74 feddans (77 acres) and is home to at least 18,000 residents, according to 2014 estimates by Madd platform, an independent urban development institution.
The controversy over the area dates back some three decades, when development projects began to be proposed and Gulf investors started acquiring buildings and blocks of land in the area.
The government has said that it is willing to provide homes in the same area for the 4,500 families that currently live there, but residents say the solution is inadequate because they would not be able to afford to rent or buy in the area after it is developed.
A list of demands by residents presented to the housing ministry earlier this month included lowering rent to EGP 300 and ownership instalments to EGP 700; increasing the cash compensation; and offering alternative residential units in a nearby area.