The Industrial Development Authority (IDA) is rolling out stricter measures to combat speculative practices on industrial land — commonly known as land hoarding — while preparing for a third phase of industrial land offerings, sources tell EnterpriseAM. The measures aim to resolve one of the most serious issues facing industry by ensuring that awarded industrial plots are used for their intended purpose rather than being held or resold for profit.

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Zero tolerance for hoarding: Industry and Transport Minister Kamel El Wazir has outlined a series of steps to safeguard national industries and protect manufacturers' interests, with the measures targeting land hoarding practices that undermine industrial development plans and hinder efforts to localize various industries, ministry sources tell EnterpriseAM.

Not the first step in this direction: Back in October, the IDA announced that industrial land would no longer be able to be sold or transferred without approval from the authority, with the receiving party required to pay in full for the land, make an effort to obtain all operational licenses necessary to develop the land, and start operations for no less than three years before engaging in any transaction with respect to the land.

The ministry’s new measures aim to tighten up these existing restrictions: Extensions to the development period for industrial land will now require explicit approval from the Industry Minister, while failure to demonstrate project progress within the stipulated timeframe will result in the land being reclaimed, with legal action taken against the landholders.

Rental contracts will face closer scrutiny: Rental contracts alone will no longer be sufficient to establish that there are industrial facilities operating on industrial land unless proof of operation and three years of activity are provided. Exceptions apply to financial leasing contracts and usufruct agreements issued by land-owning authorities. Renewal of rental agreements for previously operational facilities will also require regulatory approval.

Environmental approvals will be tied to progress: Environmental clearances for industrial activities will only be issued after demonstrating operational progress and completing technical inspections for the original activity.

New inspection measures and penalties for those that shut down production: El Wazir had emphasized during a recent meeting with investors that the ministry would impose severe penalties on investors who halt production to divide and sell industrial land or lease it out for unauthorized activities. No industrial facility will be shut down without a decision from the prime minister, he had noted, adding that inspections will now be conducted by unified committees to ensure efficiency and transparency.

The ministry is already taking a hard line against inactive landowners: This month alone saw 43 industrial land plots reclaimed after their owners failed to demonstrate their seriousness about setting up industrial facilities, with the reclaimed land set to be reallocated to committed investors, an Industry Ministry source told EnterpriseAM.

Other gov’t entities are following the Industry Ministry’s lead: The Property Registration Authority has imposed new restrictions to align with Industry Ministry directives, with all transactions, sales, or transfers of industrial land ownership only allowed to be processed if they have written approval from the IDA. The policy is also expected to crack down on intermediaries and land brokers while reclaiming plots from non-compliant investors for reallocation to serious ones, IDA chief Nahed Youssef said in a statement.

It’s all about facilitating localization and lowering the import bill: The main objective of industrial land expansions is to strengthen the local supply chain to reduce reliance on imports, head of the Federation of Egyptian Industries’ engineering chamber Mohamed El Mohandes told us. Since the onset of the FX crisis, manufacturers have increasingly sought local suppliers as import challenges and port closures have curtailed access to imported goods.

The new measures will directly stabilize industrial land prices, creating opportunities for a new generation of manufacturers and encouraging existing ones to expand immediately, vice chairman of the SME Investors Association Alaa El Saqty told EnterpriseAM. Prohibitions on leasing or selling land within a set timeframe aim to foster immediate investment in productive ventures, he added.

The measures will also help free up idle industrial land to feed growing demand: Large areas of industrial land remain idle in high-demand areas such as Tenth of Ramadan, Sixth of October, and Obour City, multiple sources told EnterpriseAM. With demand for industrial land continuing to be strong, authorities are expediting efforts to verify usage and reclaim unused plots.

Some leeway will be offered for non-compliant projects: Projects with building permits but incomplete construction or less than 50% of the permitted building area completed will receive a grace period of up to 12 months, with a 50% discount on late fees. Projects without building permits will have up to 18 months to comply, with a 25% discount on late fees.

The measures come as the gov’t has rationalized land pricing: New pricing mechanisms have resolved long-standing complaints from manufacturers about inflated land prices, which previously prompted investors to tap brokers to secure industrial plots. Industrial land is now more fairly priced, with options tailored to investors' financial capacities, including outright purchase, usufruct agreements, and the option of serviced or unserviced land. Prices for serviced plots range between EGP 1.2k and EGP 1.6k per sqm, depending on location.

The upcoming round of land allocations will see some changes, though: Updated land allocation requirements mandate non-refundable deposits at the time of receipt to cover maintenance and management costs. Applicants must provide commercial registration records or proof of a legal entity before applying for land. Moreover, investors who have had land reclaimed due to non-compliance will be barred from acquiring new plots for five years.

Your top industrial development stories for the week:

  • Local auto air filter manufacturer Defo Filter plans to set up a new factory with EGP 100 mn in investments, featuring five production lines over 2.7k sqm in Dakahlia, Defo CEO Adel Gamea told Hapi Journal. The factory is set to be operational by the end of 2025, with production set to begin in 2026.
  • Industrial land leasing via leasing finance: The Industrial Development Authority has approved the use of financial leasing for industrial land plots and completed or ongoing industrial buildings, while maintaining ownership until full payment and production commencement. Lessees and leasing firms must meet all financial obligations on time, per legal requirements. (Al Borsa)
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