A boom in the construction market has led to an increased demand on building products and materials. The construction market is growing at 15% annually. Local steel and cement production are running short in quantities, leading to soaring prices, and delays in construction projects. Demand on innovative building products, such as green building materials, is increasing. Best prospects include architectural and engineering services, consultation and design, fire and sound proofing materials, management consulting, as well as insulation products for floor, walls, and ceiling to save energy. Competition is mainly from German, Chinese, Italian, and Turkish products. Prospective buyers are large housing developers, public sector organizations, small contracting firms, and individuals.
In the past four years, the construction industry has witnessed remarkable growth, creating an increased demand and price soaring of building products and materials, along with a shortage in the supply of basic building products. Industry sources report a 15% annual growth rate in 2007 for the construction market. The private sector’s share of the construction industry reached 88% in 2006/07. With a population growth of 1.7% annually and a heavy congested capital, the demand on housing in new satellite cities on the outskirts of Cairo has increased. The government needs to build a minimum of 450,000 units annually to keep up with the population growth. As real estate represents a lucrative form of investment, it attracted excess liquidity from Gulf developers whose own markets have reached saturation. In 2006, Damac Properties from Dubai invested $5.7 billion to build the first phase of Hyde Park, a 6.3 million square meter community; in 2004, Emaar also from Dubai, invested $4 billion into a 4 million square meter residential community on the Mokattam hill, in addition to Marassi, its development on the North Coast; the Qatari Diar is investing about $1 billion to build commercial and residential skyscrapers on the Nile. As for development in satellite cities such as Sixth of October City and 10th of Ramadan City, multi-use compounds are mushrooming and schools and hypermarkets are increasing, creating an attractive destination to Cairenes who are looking for a better living environment.
Demand for construction materials is also affected by construction activities in other key sectors of the Egyptian economy, such as the agricultural sector, construction of roads and airports, and infrastructure. Local manufacturers (mainly private sector) meet about 75% of the total market demand for building materials and products. The projected annual growth rate in the coming three years for Egypt’s imports is estimated at 10%. The locally produced items include glass, paints, construction chemicals, steel, and cement. Regulatory reforms and the existence of several niche markets in this sub-sector will attract foreign investments and local production under license. Energy prices are government subsidized, giving an advantage to the local industry of different construction products. This subsidy is decreasing gradually through the end of 2010.
Business opportunities for U.S. firms are in design engineering, project management, consultancy, introduction of state-of-the-art technologies and products. Green building is in its infancy stages in Egypt. Awareness is needed to start using this concept and related products.
Demand on steel scrap to be used in the steel manufacturing is increasing, in order to meet the growing local demand.