The cabinet announced last week that private real-estate developers will be tasked with building 10,000 social housing units in a two-phase pilot project.
The project, part of a broader strategy to involve the private sector in plans to achieve sustainable development, is being implemented under a cooperation agreement with the World Bank and the Social Housing and Mortgage Finance Fund (SHMFF).
Appointing the private companies to this task partly aims at testing the private sector’s ability to adhere to the state’s stringent price ceilings for affordable housing.
The Ministry of Housing has earmarked 381 feddans in 11 cities for the two phases of the project. The first phase targets industrial centres and new cities such as Hadayeq October, 10 Ramadan City, New Sohag, Sadat City, and New Obour, with a total area of 169.79 feddans.
The second phase includes New Borg Al-Arab, New Minya, New Aswan, Hadayeq Al-Asher, and New Assiut, covering an area of 131.03 feddans.
Mai Abdel-Hamid, head of the SHMFF, said that the companies are being chosen based on their track record in national housing projects, sound financial position, and the affordability of the units they will be tasked to build.
Sources from private-sector companies told Al-Ahram Weekly that discussions are still ongoing between the developers and the SHMFF over the conditions for implementing the project.
Alaa Fekri, a member of the Real Estate Investment Division at the Egyptian Union of Chamers of Commerce, said talks are currently underway to finalise the contractual framework, with the state stressing the need to sell the land to the developers rather than treating it as the state’s equity contribution in partnership arrangements.
He added that the authorities are also introducing new development requirements compared with previous housing projects, including stipulations that every building, each of which will have five storeys, should have an elevator.
The price has been set by the SHMFF at LE1.35 million per 90-square-metre unit with three bedrooms.
Fekri noted that the private sector will be tasked with receiving applications, while the SHMFF will review the applicants. Land will be handed to the developers at a price of LE1,250 per square metre.
He said that the current conditions would translate into losses of around eight per cent per unit for developers, however, which would cover their value in installments that accrue interest.
Negotiations are underway to allocate larger areas for commercial units in the same project to represent 40 per cent rather than the 30 per cent usually stipulated by the state in investment projects.
He explained that buildings allocated for non-residential commercial activities usually consist of a ground floor and a single storey above it and that negotiations are underway to add a second.
Private-sector investors believe they have legitimate reservations about implementing the project, chiefly related to inflation and the availability of construction materials at prices consistent with the announced sale price of the units.
Marwan Fares, a member of the board of the New Cairo Investors Association, said that developers want assurances that they will be paid for their work at fair rates, pointing out that market conditions over the project’s implementation period are uncertain.
Sharp increases in the prices of steel, cement, bricks, and other construction materials could occur amid rising inflation, he warned, adding that contracts should take such variables into account and guarantee swift compensation in the event of unforeseen hikes.
He added that the cost of construction and utilities for a 90-square-metre unit currently stands at around LE900,000, excluding the price of the land, based on prevailing market rates, which may not be sustained throughout the project’s duration.
To safeguard developers’ rights, supply contracts should be concluded with cement and steel producers at agreed prices during the lifetime of the project, so that developers are not exposed to cost hikes or delays if the project no longer covers their costs, he said.
Mohamed Al-Bostani, head of the New Cairo Developers Association, said there should be a fair unit price to encourage private-sector participation in the initiative. He called on the state to bear the cost of the land in return for a share in the sale of the units, while assigning the marketing of the project to the government through the SHMFF.
He added that while the state requires the real-estate developers to have strong financial positions, the developers likewise want guarantees that the cost assumptions underpinning the agreed sale price will not rise during the three-year construction period in a way that would expose them to losses.
Al-Bostani said that contracts should include clauses providing rapid compensation for any increase in cost per square metre, thereby ensuring the project is delivered on schedule and in compliance with the government’s specifications.
Fekri noted that throughout the implementation period the developers are required to pay interest on the land. However, ongoing discussions include a proposal by Walid Abbas, assistant minister of housing, utilities and urban communities for New Urban Communities Authority affairs, to set the interest rate on land at five per cent below the Central Bank of Egypt’s rate as a form of support for the developers.
Fekri added that the model applied by the private sector differs from the approach adopted by the government in its projects. He explained that the government acquires land free of charge, extends utilities at no cost, and does not factor in the expense of green spaces, rendering the competition, in his view, uneven.
Between 2008 and 2020, the private sector implemented social housing projects undertaken by most major companies, with each developer setting sales prices according to the specifications of its project.
Land was offered at a nominal cost, and more than 100 companies launched their units simultaneously, creating competition that limited price increases.
Fekri said that this competitive environment had resulted in all the developers selling their units at a uniform price of LE120,000.
The World Bank has supported the government’s social housing programme over the past decade and requires private-sector participation in its implementation.
According to cabinet figures released on 13 January, Egypt is currently building 1.72 million housing units, of which more than 790,000 have been delivered, complete with basic services.
A further 242,000 units are at various stages of construction, while 40,000 additional units are on offer.
* A version of this article appears in print in the 26 February, 2026 edition of Al-Ahram Weekly
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