Egypt’s steep learning curve in national housing projects
 
 
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A week ago, at least one child was killed when security forces used explosives to demolish apartment buildings constructed without official permission along a strip of land behind Egypt’s constitutional court in Maadi.

Video footage obtained by Mada Masr shows residents screaming in grief and anger around a small, blanket-shrouded corpse before facing off against riot police, fleeing through rubble as tear gas rounds are launched.

The land in question is claimed by Maadi Investment Corporation, a subsidiary of the Ministry of Investment. The owners of the demolished buildings appear to have, at best, uncertain claims to the land. It is not yet clear what the company plans to do with the strip of prime real estate.

This conflict echoes struggles across the country. In an April 9 statement, Minister of Housing Mostafa Madbuly said that Sadat City, located along the Cairo-Alexandria Desert Road, has seen illegal encroachment and settlement along 70,000 feddans of state land. These settlements, he said “obstruct the future development of the entire Nile Delta.”

In late March, he called on the army and Interior Ministry to evict the “blatant encroachments” in the satellite city. “There will be no normalization of people who take state land,” he said.

Instead, about 685 feddans of land in Sadat City have been designated to be part of a mass housing project announced by the Egyptian army and Emirati-based contractor Arabtec.

These aggressive, often violent evictions, paired with high-minded proclamations about state-led efforts to house the poor highlight the incoherence of Egypt’s housing policy, in which informal settlements are treated as a social evil, while a series of official programs channel housing subsidies to the upper rungs of Egypt’s economic ladder.

Egypt’s housing problems are well documented. The population has more than tripled in half a century, skyrocketing from around 26 million in 1960 to more than 83 million today. Meanwhile, the vast majority of Egyptians continue to live crammed together in the Nile Valley, on just five percent of Egypt’s land.

Left to its own devices, the private sector has produced an oversupply of luxury and upscale housing developments.

“You have over seven million units that are unoccupied, most of them are still being built or are not finished and are therefore not put on the market, because our market is very speculative,” explains Yahia Shawkat, an architect and housing researcher who runs the blog Shadow Ministry of Housing.

At the other end of the socioeconomic scale, there is a critical shortage of affordable housing. By 2010, real estate firm Jones Lang Lasalle placed the shortage at 1.5 million units. Many of those shut out of the luxury market have thus turned to do-it-yourself solutions, building without formal permissions or title to the land.

A new initiative?

Thus far, very little is actually known about the newly announced housing project. Last month, a memorandum of understanding was signed between Egypt’s Ministry of Defense and Arabtec, a construction firm whose parent company is 21 percent owned by Abu Dhabi’s state-owned Aabar Investments fund.

The total value of the project was set at US$40 billion (LE280 billion) to develop a million units of housing on 160 million square meters of land, mostly on the outskirts of Cairo. The land is to be provided free of charge by the Egyptian military, while financing for both development and mortgages will come from “Egyptian and foreign banks” on terms as yet unnamed.

Financial support to Egypt from the Gulf has been on the rise since the ouster of former President Mohamed Morsi, namely from the UAE and Saudi Arabia. Around $12 billion is going to funding different projects, as well as two stimulus packages announced by the Egyptian government that are focused on infrastructure development and social programs.

So far, no further information about this project has been released, and Arabtec, via its local media representatives, declined to answer questions. This makes it difficult to evaluate exactly what the government is planning, which some experts say is itself meaningful.

“Specificity, I think, is an indicator of whether the government is committed. That is, whether the government is saying something, whether it means what it is saying, and whether it will do what it says,” says David Smith, founder of the Affordable Housing Institute.

The back of an envelope calculation — divide LE280 billion by 1 million units, subtract some costs for infrastructure and public buildings — suggests the mean price per unit would exceed LE200,000, which is well beyond the means of Egypt’s poorest citizens.

Once again, says Shawkat, the government appears to be channeling subsidies to middle and upper class Egyptians, in the form of free land and preferential financing.

David Sims, an independent urban planning and the author of “Understanding Cairo: The Logic of a City Out of Control,” says it appears the government hasn’t learned from past adventures in mass housing.

Models of the past

Prior to the announcement of the Arabtec project in March, Egypt had two existing mass housing schemes. One was announced by then-President Hosni Mubarak in 2005, months before he went for re-election.

“Somewhere on the campaign trail, he announced, in the fashion of a pharaoh, that he was going to build a million houses and they were going to be affordable to people of low income,” recalls Smith, who was eventually called in to help develop guidelines for the program.

“I wrote a big report with a financial projection and a description. Of course, one doesn’t tell the pharaoh that it’s going to take longer and cost more than the pharaoh wants to hear. So they asked me to give them the spreadsheet so they could change all the numbers so that there were, I don’t know, 36 hours in the day. And then they went off and they did whatever they wanted to.

“I have no idea whether Mubarak’s housing program as you experience it bears any resemblance to what I wrote up,” says Smith, who has not been involved in subsequent government housing projects in Egypt.

Another project was launched in 2011, under the Supreme Council of the Armed Forces, who planned to build a million houses. “Why was it a million? Because Mubarak’s last housing program was 500,000. So we gotta do better,” says Sims.

“Whoever cooked this thing up figured it’s going to cost $10 billion, and half of that, they were asking for grants from donors. For $5 billion, this would’ve made the largest grant program in the world, ever,” Sims recalls. “Of course the donors didn’t say ‘this is ridiculous.’ They sort of said, ‘well, you know, it’s good that you’re looking at housing, because housing is a very important sector, but maybe you should have a housing policy first.’”

These projects may have succeeded in building up leaders’ populist credentials and winning votes, but actual delivery fell dismally short of the target. Mubarak’s project failed to build half a million units over six years, Shawkat explains.

“What ended up being built during that timeframe was about half the target,” he says.

Not only that, but authorities admitted that some 50,000 units were not connected to utilities and infrastructure, Shawkat says.

“You’re talking about people who have the apartment, they actually paid for it and can’t use these units,” he says. “So not only was the government not able to meet the target it set, also, a big part, a big portion of the units that actually got built are unusable.”

The SCAF project, so far, appears to be achieving similar results, Shawkat says. To build a million units in five years, the government would have to average 200,000 a year. “They are already behind target in that, because they built maybe 50,000 units in the first year and they have a target, in their second year, of another 50,000,” Shawkat says. “And up until now none of the units have been delivered to beneficiaries.”

In addition to under-delivering, few of the units built by previous governments went to their purported beneficiaries, Shawkat says. Initially, a quarter of the units in the Mubarak project were supposed to be rental units, with the rest for sale.

Sale prices started at LE50,000 pounds, with a subsidy of LE15,000 and the rest paid via loans and installments. But prices rose, creeping towards LE75,000, and loan and installment schemes added up, putting the apartments well out of the reach of Egypt’s poor.

“If you did it through the private sector schemes, or on your own, the prices would be anywhere from LE100,000 to LE200,000,” says Shawkat. And instead of 25 percent of the units being available for rent, the actual figure turned out to be closer to 10 percent.

“About 90 percent of the subsidies and the public investment went to people who weren’t poor. They went mostly to people who were middle class and upper middle class, because of their affordability, but also because, in order to qualify, you have to prove your income. And only about 30 percent of the workforce in Egypt can do that, those who work formally or have a formal job,” says Shawkat.

Although the results of the SCAF program are not yet clear, Shawkat believes they will likely be more of the same.

“They said some might be rentals. I’m not sure what percentage, but if it’s anything like the previous projects, it’s going to be around 10 percent, so it’s a very small minority.

“And even then, the rents that they are asking are a bit high for the lowest income bracket. So they’re good for the poor but not the extremely poor. So still the extremely poor are being excluded out of billions of pounds of subsidies,” he says.

Despite notable lack of success, the military seems to be repeating the program in the run up to Sisi’s presidential bid.

Core issues

Sims estimates that two-thirds of the housing units in Cairo are built informally. Given the density of Egypt’s cities, these settlements are usually built on the outskirts of the traditional core. Some, like the buildings scheduled for demolition in Maadi, are constructed on land zoned for agriculture. Others, like the settlements in the Delta that the housing minister plans to evict, are on desert land owned by the military or the state.

Despite their tenuous legal status, most of Egypt’s informal neighborhoods don’t fit the image of tarp and corrugated tin shacks the word slum might bring to mind. Brick, cement and rebar construction is the norm, as are multistory buildings like the towers demolished in Maadi. In fact, since people generally build housing for their own families to live in, they tend to err on the side of overbuilding rather than skimping on construction materials and safety standards as private developers have been known to do.

These areas are far from ideal. In addition to often being built on precious agricultural land, most lack proper sanitation facilities, roads are too narrow for emergency vehicles, and some are genuinely built in precarious ways or in unsafe areas. But in recent decades, there has been a growing orthodoxy among development organizations that the best way to resolve these problems is to work in the place whenever possible, improving building standards and building up infrastructure, rather than attempting to demolish and rebuild elsewhere.

Beyond a few small, foreign funded projects, this idea has never really caught on in Egypt, says Sims. “They do these little projects, they take an area and they, quote, try to upgrade it, and if there’s foreign money, then they eventually might get some of the sewage redone.”

Instead, successive governments have focused on what Sims calls the “high modernist approach” to housing policy, which seeks to transform Cairo into a gleaming, modern city like Dubai or Singapore, with orderly new neighborhoods taking the place of the maze of old or informal settlements. The poor, meanwhile, are to be pushed out of sight into massive cement complexes in new cities in the desert.

“One of the reasons why practically nobody lives in any of the units built in the first place, in 2005 and 2011, is the land they could find is so far out on the edges of these new towns. There’s no infrastructure, there’s no water, there’s no electricity, there’s no roads, there’s no nothing,” Sims says.

Only time will tell if the new project is any more successful than the old in getting Egypt’s poor into secure, high-quality homes. In the meantime, residents of places like the now-demolished settlement in Maadi are left with nowhere to go.

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Isabel Esterman