“Talks stopped” with Emaar over Egypt’s new capital deal

The Egyptian government’s plan to build a new capital city in the desert east of Cairo has hit another obstacle after talks with Dubai-based Emaar Properties PJSC to develop a 607ha plot there failed, the official in charge of the mega project said.

"The negotiations have stopped," Ahmed Zaki Abdeen, chairman of the army-controlled company organising the project, ACUD, told Bloomberg.

The retired general said the Emirati company wanted to pay less than the 3,500-4,000 Egyptian pounds ($223) per square metre ACUD sought.

The failure of the talks with Emaar will disappoint Egyptian President Abdel Fattah al-Sisi, who has staked the success of the scheme on it being a successful real-estate development.

Just under three weeks ago, Abdeen revealed that talks with Chinese developer China Fortune Land Development (CFLD) had also been curtailed after the two sides disagreed over how to split revenue from a much bigger, 6,070ha area CFLD had pledged to develop in the city, which does not yet have an official name.

CFLD had said it would invest $20bn in developing its tract over 25 years.

Emaar’s Egypt unit, Emaar Misr, played down Abdeen’s statement, with a spokesman telling Bloomberg that the "interest in the new administrative capital and other land offered by the government is ongoing. These are always subject to long-term negotiations and financial evaluation by all parties involved."

Emaar has had an on-again-off-again relationship with the project, which is called the New Administrative Capital for now, since Sisi announced the plan in 2015.

Then, Emaar’s chairman Mohamed Alabbar had been slated to lead the development but the two sides could not agree on a way forward and Egypt began looking to China for investment.

An early participant was state-owned contracting giant China State Construction Engineering Corp, which is building 20 towers in the new capital’s central business district, financed by a $3bn loan from the China Exim Bank.

Separately, Egypt’s State Information Service says Egyptian state-owned and private contractors are building thousands of housing units at the site. 

Worried by overpopulation and congestion in Cairo, Sisi’s plan is to move the entirety of Egypt’s legendarily huge state apparatus, including 34 ministries and many foreign embassies, to the as-yet unnamed site marked out over 725-sq-km of desert 35km east of Cairo.

Officials imagine 6.5 million people will eventually be drawn out of the capital to inhabit the city, which they hope will be developed through a Dubai-style real estate business model.

However, critics of the plan point out that dozens of new desert cities launched in Egypt over the last 50 years now sit as ghost towns, and that the speculative real estate model creates dysfunctional spaces where ordinary Egyptians cannot afford to live. 

Image: Artist’s render of Egypt’s New Administrative Capital, planned for a 725-sq-km site in the desert east of Cairo (Courtesy of the Urban Development Consortium, UDC+5)

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