GCC + international investments are pouring into the government’s Darah Provincial Capitals Development Project: Egypt’s real estate market is seeing plenty of appetite from foreign investors looking to get in on government-led development projects, with the Darah Provincial Capitals Project attracting regional and international investors. These investors are looking at ways to partner with local players on implementing large-scale projects like Darah, several sources told Enterprise. Private sector investments have become particularly important as the government looks to alleviate the financial burden on state coffers, our sources tell us.

REFRESHER- The Darah Provincial Capitals Development Project, which was announced atthe end of 2020, aims to generate more housing and improve the quality of services and infrastructure in the capital cities of governorates outside of Cairo. The initial phase of the initiative was expected to cost some EGP 120 bn, sources told us at the time. The project is expected to cost a total of EGP 262 bn upon completion. The project is designed to construct residential and commercial units and services, and is ultimately meant to discourage cross-governorate migration by providing older provincial cities with services comparable to those found in more newly developed cities.

The Urban Development Fund has been looking to bring in more private sector players as funding for the project has become complicated: The Urban Development Fund’s negotiations with banks to borrow EGP 53 bn have stalled as the fund needs approval from the Central Bank of Egypt to receive a guarantee from the Finance Ministry, head of the Urban Development Fund Khaled Siddiq tells us. The alternative, he explains, is opening up space for the private sector to get in on the development projects with the fund.

Offers are flowing in: There are a handful of offers on the table from the private sector to work on the Darah project, which are currently under discussion, according to Siddiq. Egyptian companies are competing alone and there are also several consortiums of Egyptian companies with Gulf or international players, Siddiq said.

Kafr El Sheikh and El Mahalla in particular are seeing strong interest: A number of the bids the fund is currently looking at are offers to participate in a 180 feddan investment project in Kafr El Sheikh. The contract for the service project will be set up under a public-private partnership agreement, Siddiq said. Another project that’s also piquing investor interest is a residential development spanning 68 feddans in Mahalla, with regional and international investors submitting bids, according to Siddiq.

What’s the timeline for the Darah project looking like? Darah is divided into three phases, with the goal of covering all 27 governorates by the end of the project. The fund opened the door for citizens to book apartments in the first phase of the project in December, with the first phase spanning nine governorates — Dakahlia, Menoufia, Sohag, Qena, Minya, Fayoum, Suez, Damietta, and Kafr El Sheikh. The first phase was initially set to include 14 governorates, but Cairo, Sharqia, Qalyubia, Gharbia, and Luxor were pushed to a later phase. The fund does not currently have a timeline for when it will open the door for bookings in the second phase, considering weakening purchasing power and lower appetite for real estate purchases, Siddiq told us.

The government has been focusing on several urban development projects as of late:Darah is part of an overall network of development projects across the country the government has undertaken in the past few years, including in Cairo with the Fustat Garden development, the Magra El Oyoun development project, and the Old Cairo redevelopment project.

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