Industrial developers equip lands with the infrastructure needed for projects
To facilitate the work of industrial developers, the cabinet last month put in place new regulations to re-introduce the allocation of industrial land system after a few years’ hiatus. According to Minister of Housing Assem Al-Gazzar, seven industrial developers have since submitted requests to the New Urban Communities Authority with a view to acquiring a total of 13 million square metres of industrial land.
Industrial developers upgrade and provide infrastructure and utilities such as roads, water, sewage, electricity, gas, and telephone lines, logistical and security services and maintenance work, and marketing strategies to promote industrial areas locally and internationally.
The new amendments to the system that was first introduced in 2006 include the need to pay 10 per cent of the price of the land as a down payment immediately following the decision to allocate it to developers. The deadline for completing a project is five years and should be carried out in two phases. The first phase includes basic construction and at least 35 per cent of the construction and infrastructure work.
The Industrial Development Authority (IDA) allocated eight million square metres of land to five industrial developers in 2018. Three of these were in Sadat City on a total area of 3.9 million square metres, and the other two were in 10 Ramadan City on three million square metres of land. The lands were handed over to the developers in the first half of 2019.
In 2017, the IDA drafted new contracts with industrial developers to prevent them from increasing land prices after their allocation. The contracts obligated the developers to complete the planned infrastructure work within a year and the buildings within two years before handing the land over to investors.
According to the IDA’s website, the industrial developer system is meant to provide investors with industrial land that has been developed with complete facilities. The authority adopted this system after partnering with the private sector to allow industrial companies to develop, facilitate, and manage industrial zones through international tenders.
Egypt’s industrial sector needs more than seven million square metres of land with infrastructure per year, whereas the state can only provide three million square metres.
Thus far, industrial developers have finished building the infrastructure for industrial land in 12 areas in 10 Ramadan, 6 October, Sharqiya, Sadat, and Borg Al-Arab cities.
Bassel Shoeira, vice chair of Polaris, an industrial developer, said the regulations to the system laid down in 2018 have not really changed. Developers used to pay 25 per cent as a down payment, and now they pay 10 per cent before the allocation and 15 per cent after they are allocated the land, he added.
Shoeira believes the industrial developer system is beneficial because developers receive requests from investors with real projects in hand and not from middlemen or brokers. He added that Egypt’s industrial areas offer high-quality land with premium infrastructure.
After industrial developers receive land from the New Urban Communities Authority, the IDA finalises licences and monitors the work.
Moharram Hilal, chair of the Egyptian Federation of Investors Associations, agreed on the usefulness of the system, adding that the state should supervise the prices offered to investors.
Kamal Al-Desouki, a member of the board of the Federation of Egyptian Industries, said there had been changes to the regulations supervising the work of industrial developers every month to ensure they are developing the land allocated to them according to schedule.
Besides the industrial developer system, the state should continue selling land directly to investors, he said, as some could build the infrastructure and buildings needed for their projects themselves without the need to pay industrial developers to do it for them.
He suggested that small and medium-sized enterprises (SMEs) should be able to buy land from the state complete with infrastructure on installment plans ranging from between three to four years.
* A version of this article appears in print in the 6 April, 2023 edition of Al-Ahram Weekly