A developer company acquired the Ministry of Interior’s former headquarters in Cairo Downtown. The building was offered by the Sovereign Fund of Egypt. The building will be transformed into a centre for start-ups.
The Sovereign Fund of Egypt signed a contract to develop the former Ministry of Interior headquarters with a developer company to transform it into a sophisticated mixed-use destination.
The partnership aims to transform the building into a regional centre for start-ups, as part of an expanded plan by the Sovereign Fund of Egypt to transform the downtown area into a hub for startups.
The project aims to serve entrepreneurs and innovators and works to attract a new category of tourists to the downtown area, who are the youth, which will contribute to the development of the emerging companies sector and the tourism sector, achieving economic development at the macro level and highlighting the diversity of the Egyptian economy in general.
Daily News Egypt reached full details of the project, starting with the company’s submission of a technical proposal to the Sovereign Fund of Egypt, which was studied, and after approval, it submitted the financial offer, as the project includes educational, hotel, and administrative units.
Ahmed Othman, CEO of the developer company, said that the company has launched two tenders, the first to carry out the infrastructure works for the project, and the second to remove a number of small buildings in the old headquarters.
He explained that the company has completed the designs for the project to develop the headquarters of the Ministry of Interior and will start implementation work after the end of the Eid Al-Fitr holiday.
He pointed out that the financing of the project will be 50% self-financing, and 50% bank financing, pointing out that the financing of the first phase is entirely from the company’s own resources.
He pointed out that the company is currently in negotiations with 3 banks to obtain a loan to finance the remaining phases of the project, namely: Banque Misr, the National Bank of Egypt, and the Arab Investment Bank.
He added that the company carefully studied the components of the project and sought the help of the British BDP to carry out the architectural designs for the project, and it is one of the oldest offices in the world in the field of reusing historic buildings.
He added that the company aims to complete the development of the interior building by 2025, explaining that the development will take place in 3 phases, with a total investment estimated at EGP 800m.
He explained that the project includes 7 buildings with a built-up area of about 39,895 square metres, and it will be developed into a centre for start-ups, as well as a commercial, administrative, hotel, and educational project.
He stated that the complex will be developed according to the fund’s vision to turn it into a mixed-use innovation area based on the highest standards of sustainability by obtaining the LEED certificate and providing green spaces in the heart of historic Khedive Cairo.
The first phase of the development process will include the services area and the university, which has a capacity of about 800 students, and is expected to be completed early next year, with investments amounting to about EGP 150m, while the investments of the second phase amount to about EGP 250m, and finally EGP 400m for the third phase.
He pointed out that the second phase of the commercial and administrative part of the project will focus on attracting startups and small companies, stressing that 50% of the project will be administrative buildings.
He pointed out that the finishes and the rental value will be suitable for young people while maintaining the profitability rate, pointing out that the company will implement a large garage in the project, to reduce the irrigated pressure in the area, in addition to the presence of several shops within the service area.
The third phase will include the inauguration of a 3-star hotel to serve students at the university, especially students and doctors, explaining that the downtown area has five-star hotels that do not suit the target segment of the project, which gave rise to the idea of a 3-star hotel.
The partnership deal stipulates that the Sovereign Fund of Egypt shall lease the former Ministry of Interior headquarters to the developer company in exchange for a fixed rent and a share of the project’s revenues.
He explained that the expected returns from the project will be calculated after operation, as the company aims to collect costs amounting to EGP 800m within 10 years, provided that it starts reaping profits after that period.
He added that the lease period for the Ministry of Interior building project is 25 years, noting that the return on investment is expected to reach 30-35% after the first ten years.
He explained that the hotel part of the project will generate revenues in dollars that would maintain the value of the expected returns in light of the continuous increase in costs.
With regard to the part related to administrative buildings for start-ups, he revealed that there are negotiations with a major American management company that specializes in programs for start-ups, not only for management, but will also undertake operations and will help start-ups to provide programs for them.
According to Othman, the company is already advanced in several projects put forward by the Sovereign Fund, especially for those buildings located in the downtown area, stressing that the company is very interested in developing the downtown area.
He added that the downtown area enjoys several advantages, especially its location in the middle of Cairo, coinciding with the exit of most government agencies, in addition to the low cost of transportation in the downtown area, and its proximity to several metro stations, stressing its attractiveness to tourists and Egyptians alike.
