CAIRO: Construction activity in Egypt rose this month, after a significant drop due to instability following the political events that began unfolding in late January.
While Al-Borsa newspaper reported that prices of construction materials were marked down in the beginning of July, bringing cement to LE 430–450 per ton, analysts and business owners see this period as a slow, yet definite recovery phase.
Despite the recent dreary slowdown in the real estate and construction sector, Amr Abu Shullaih, co-founder and CEO of Concord Construction Materials, said this past month was significantly better than earlier this year.
“We are approaching the normal capacity, it is not like before the revolution but demand for cement, both liquid and ready mix concrete, is increasing these days,” he said.
Allen Sandeep, construction analyst at Beltone Financial, also said that while business is slow, it is picking up significantly when compared to the sluggish days following the 18-day uprising earlier this year.
“Although there are slow signs of recovery, we are seeing some good signs in construction these days,” he said. “Just in the past month and a half, a few hundred million dollars were injected into the sector, it is not like before but it is still great.”
Sandeep added that Egypt’s government had plans before the revolution to spend about $50 billion by 2015 on infrastructure, which includes enhancing and building new hospitals, schools, water plans, highways and housing.
“These projects are ongoing right now, the pace will be slower, but they plan to reach this goal,” he said.
According to Shullaih, from March throughout May, factories were significantly reducing prices of cement because there were virtually no sales.
His company experienced the effects of the plummet firsthand; now, on the other hand, demand for construction is changing, despite the economic slowdown.
Before the revolution, the company’s was sending out around 500-600 cubic meters per days, but as a result of the political unrest, there were days when they were only producing as little as 12-20 cubic meters of ready concrete mix.
“Just yesterday we sent out 370 cubic meters to Hurghada, the day before we sent 300 cubic meters, so we are nearing our capacity before the revolution,” said Shullaih.
He pointed out that because of its high quality, this kind of mix is used primarily for the foundation of buildings.
Shullaih attributes the high demand these days to the holy month of Ramadan, which is expected to fall on August 1 this year.
He pointed out construction workers save up their vacations from throughout the entire year, so they can take a week or two off during the feast holiday directly after Ramadan. Construction activity is expected to slow down again as a result.
Steel factories, on the other hand, were forced to reduce prices to by LE 200 per ton to reach LE 4,800.
According to Harshit Oza, real estate analyst at Beltone Financial, real estate sales have improved from the first quarter, especially now after an administrative court ruled in favor of Talaat Moustafa Group (TMG), Egypt’s largest property developer, who were facing a lawsuit for acquiring land at undervalued prices from officials under the regime of ousted president Hosni Mubarak.
“The pace of growth is not that significant and it is slow, but there is more liquidity for real estate companies now so they are recovering,” said Oza. “It is very difficult to give a definite timeframe for recovery, but it is on its way as the country stabilizes and after we see what happens regarding the land allocation law.”
TMG, Palm Hills Development (PHD), and other real estate firms have been mired in court cases over the past few months for purchases of state land through direct contracts rather than public action.
In May, PHD, the country’s second biggest publicly traded real estate company, gave back 9 million square meters of land in Egypt’s north coast in city Marsa Matrouh to the state.
Just a month before that, in an effort to reduce their land liability this year by 50 percent, they returned 190 feddans from their Sixth of October compounds.
Amer Group also returned 2.6 million square meters of land back to the government in May “in order to reduce its exposure on the north coast as it foresees a possibility of lower demand for second homes in Egypt in the near term.”
