The $40bn programme to build a million new homes in Egypt has been shrunk to just 100,000 homes, Egypt’s housing minister said yesterday, contradicting a statement last week by UAE contractor Arabtec.
Dubai’s largest listed construction firm, Arabtec was awarded the remarkable contract to build a million affordable homes in March 2014, with construction due to begin in the third quarter of that year.
But work has yet to begin and confusion has resulted from conflicting reports in recent weeks.
"Negotiations with the company are currently taking place over the building of 100,000 units within five years," said housing minister Mostafa Madbouly yesterday to local newspaper, Al Masry Al Youm, Reuters reported.
He added: "There is no place for talks about assigning the million unit project that was announced 18 months ago."
The minister did not give a reason for downsizing the project.
Arabtec has been in talks with the Egyptian government about the scheme.
The firm, whose majority shareholder is the government of Abu Dhabi, last week denied a media report saying it will develop only phase 1 of the housing programme, which involves building 100,000 low-cost homes in the cities of Obour and Badr east of Cairo.
In a statement to the Dubai bourse it said there had been "no progress regarding the housing project in Egypt" and therefore denied the media report, the source of which it did not identify.
That followed its denial on 20th August of media reports saying the company was withdrawing from the housing project altogether.
Uncertainty over the scheme comes amid business hardships for the contractor.
On 15 August Arabtec announced a loss of just over $271m (Dh998.1 million) in the first half of this year, compared with a profit of $65.4m (Dh240.3m) in the first half of 2014, which it blamed on "a number of poorly performing projects" and "the continuation of the difficult trading environment".
Meanwhile, Egypt needs more housing.
According to the World Bank, nearly a quarter of its population, or 20 million people, live in informal housing.
The bank said Egypt needs to build about 300,000 new homes every year for newly formed households, and 254,000 homes right away to catch up with a shortage accumulated up over the past five years.
Since forcibly taking power in July 2013 from the elected president, Mohamed Morsi, army chief Abdel Fattah al-Sisi has launched an extraordinary push on infrastructure development to galvanise the Egyptian economy, including a new channel for the Suez Canal, the million affordable homes, and a plan to build an $80bn new capital city east of Cairo.
The Gulf states of Saudi Arabia, UAE, Kuwait and Oman have pledged a combined $12.5bn toward Egypt’s development.
Photograph: A poor neighbourhood in Cairo, Egypt, in 2008 (David Evers/Wikimedia Commons)