Construction sector

An Expert's View about Building Products and Construction in Egypt

Posted on: 28 Dec 2012

Construction is one of the most active sectors of the Egyptian economy, the sector accounts for 7% of national GDP.

Construction sector in Egypt Construction is one of the most active sectors of the Egyptian economy, the sector accounts for 7% of national GDP. Construction investment is expected to increase to about US$7.3bn by 2015. There are around 31 public and 36000 private contracting firms. Market overview Egypt has the largest population in the Arab world (approximately 90 million, likely this number will double by the coming 25 years) and is the fourth-largest economy. Egypt has a strategic location in the centre of the Middle East and North Africa (MENA) region (800 million people) and has links to the three continents of Asia, Africa and Europe. It is the hub for the world’s maritime traffic with commercial ports on the Mediterranean and Red Seas. Egypt is signatory to many regional and international Free Trade agreements which reduce or wave completely the custom duties on exported / imported goods. The corporate and individuals income taxes are limited to 20%. Egypt is a leading manufacturer of reinforced steel in the Middle East, the annual production reached 7.2 million tons in 2011. After regaining confidence in the construction materials sector, Egyptian banks announced the provision of EGP 1.7 billion loans in 2012 to finance two new Steel manufacturing plants. The cement industry is witnessing a booming expansion since 2005 with 14 factories scattered all over Egypt. The annual production of grey cement reached 54 million tons in 2011. Key opportunities The sector is starving for innovation and sustainable, smart design - where UK excellence is internationally recognised. There are a glut of major and diverse new projects, including high-end real estate, tourist and leisure developments, infrastructure projects, and social housing. There is an increasing demand for housing to cope with the increasing population. The Egyptian government, in association with the U.S. Agency for International Development, started the mortgage finance system of the country at a cost of US$35 million in the coming five years. The improving mortgage finance system will lead to easier availability of finance for residential construction, thereby increasing the spending on residential construction in the long term. The government plans to build three nuclear power plants with a cumulative capacity of 1,800 megawatts by 2020. The National Authority for Tunnels has planned to construct a 34-kilometer-long metro line stretching from Imbaba to Cairo International Airport. The project will be conducted in four phases. The first two phases cost US$1.1 billion and are estimated to be completed by 2013, while the details of the other two phases are yet to be finalized. Egypt has put an aggressive plan targeting increasing domestic electricity production by 8.38 Gega Watts (GW) by year 2014 to close the gap between production and demand. This will mean the need to construct tens of new power stations. The Government is studying finding funds for the mega project that Dr. Farouk El Baz called “Development Passage”. This is to build new cities agglomeration in the western dessert, parallel to the Nile Valley, 1000 Km in length. PPP is being encouraged to finance public sector projects, though it can be a slow process. Schools, public hospitals, water plants, roads and bridges are all current or potential PPP projects. The Government has planned to build 1 million low cost houses over five years for poor communities. The government has dedicated 10 billion EGP in its budget for 2012-2013 for National Social Housing Project. It has also allocated 1.5 billion EGP to subsidise the housing projects for low income citizens and 55billion EGP for infra structure projects which will significantly increase demand on construction materials and equipment. Latest export opportunities in the Construction sector Latest export opportunities in Egypt Getting into the market The best business approach to the market is through finding local agent, distributor or partner. Having a local partner can be vital to successful penetration of the market. There are several reasons for this. Firstly, given the continuing bureaucracy, a local partner can shepherd the foreign business through the delays and obstacles. Secondly, foreign companies require a local agent to bid for government tenders. Thirdly, as the Egyptian market becomes more sophisticated there is a growing demand for after sales service, which a local agent can convincingly provide. More about doing business in Egypt Contacts Market intelligence is critical when doing business overseas, and UKTI can provide bespoke market research and support during overseas visits though our chargeable Overseas Market Introduction Service (OMIS). To commission research or for general advice about the market, get in touch with our specialists in country - or contact your local international trade team ξ Sonia Elkattan, British Embassy Cairo, Egypt. Tel: +202 27916000 or email: ξ Marwa Hussein, British Embassy Cairo, Egypt. Tel: +202 27916000 or email: Contact your local international trade team UKTI Events UKTI runs a range of events for exporters, including seminars in the UK, trade missions to overseas markets and support for attendance at overseas trade shows. Latest events in the Construction Sector Useful links More about OMIS and other UKTI services for exporters
Posted: 28 December 2012

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