In 2015, Egypt unveiled plans to construct what was deemed “the new capital,” with an architectural model full of skyscrapers and glittering lights at a lavish investment conference in Sharm El-Sheikh.
The mega urban development project came at an estimated $45 billion investment cost and, naturally, became the focus of Egypt’s attempts to lure back foreign investors after years of subdued interest.
It is now more than two years later and construction is well underway at the New Administrative Capital. Set squarely between central Cairo and the Suez Canal Economic Zone on 170,000 feddans of land, the city is meant to be an economic zone with a target of contributing $10 billion to GDP by 2030.
“It’s not that we are changing the capital of Egypt, it is an extension of the capital of Egypt,” says Ayman Ismail, founding chairman and advisor to the board of the New Administrative Capital. “We [are looking to build] a regional smart city.”
The city will mix government offices with residential and retail developments, while aiming to be home to a fully integrated socio-economic demographic, boost diverse economic activities, as well as be easily accessible.
Basically, when we look at the city, we look at a regional smart city that allows us to capitalize on the location of Egypt. We are focusing on building substantial economic growth and contribution to the GDP of Egypt. The target we have set is $10 billion [of GDP] by 2030.
In doing so, the New Administrative Capital hopes to provide ample opportunity for investment over the coming decades as it attracts 1 million people in its population growth scheme.
Since the start, plans for the city have evolved, with news of the main development contract changing hands stirring speculation. After talks with an Emirati developer and a Chinese company both reached a dead end, a company was established to oversee the development of the city. This company, called the New Administrative Capital for Urban Development, is 51 percent owned by the New Urban Communities Authority (NUCA) and 49 percent by the army.
Recently, Ahmed Zaki Abdeen was appointed as the chairman of the board. Abdeen, a retired military general, formerly served as the minister for local development.
We sat down with Founding Chairman Ismail, who now serves as an advisor to the board, to talk about the latest in the city’s construction and development. Below are edited excerpts and you can see a video with the highlights here (link).
Q: Why is Egypt building a “new capital”?
A: Cairo was built for 5 million people and today has close to 18-22 million people, depending on the time of day. The population has outgrown the size of the land, so expanding Cairo as a capital is extremely important…for us to be able to reach 14 percent urbanization and all the way up to 24 percent, which will get us to where we need to be.
The location of the project is 30 kilometers away from central Cairo and 40 kilometers away from the center of the Suez Canal [Economic] Zone. That is a very important location because it’s in the middle and it makes sense to say that this will be an economic zone.
Total size of the land is 170,000 feddans, which makes it exactly the same size of Singapore or the developed part of Dubai, so it has a lot of potential and the ability to grow.
How did the strategy change after initial talks with the Emirati and Chinese companies?
The demands of the [Emirati] developer were much higher and more aggressive than the country could have accepted, and I believe that a project of this size should be within the country’s full control. We are in negotiations with them and many will be coming back to contribute to the project.
The Chinese [company was] not a developer but a contractor that [was going to] hire Egyptian contractors…so it didn’t make any sense. What they were offering was much higher than what we believed should be the right price to build the Government Park [within the city]. Still, we are working with them because they are one of the top contractors in the world and they will be building the mixed-use areas that will require high rises. They have a lot of expertise in that area.
What is the city meant to be?
Basically, when we look at the city, we look at a regional smart city that allows us to capitalize on the location of Egypt. We are focusing on building substantial economic growth and contribution to the GDP of Egypt. The target we have set is $10 billion [of GDP] by 2030.
Now that means that we have to design it in a different way and one of the key areas here…is that it has to have a strong economic impact.
How will you attract people to the city?
We need to find the means to attract 1 million people to relocate to the new capital…and for us to be able to do that, there are two main factors we need to focus on.
[One is] accessibility in terms of transportation. We are currently working on connecting central Cairo to the capital with a fast train. We are also looking for ways to connect to the Suez Canal [Economic] Zone.
The other area that is very important is to create economic activity. We’ve done a study looking at three factors to pick the economic activity we want to focus on. First one is competitiveness, so an industry that Egypt has a competitive advantage in. [Second] is population growth because we are aiming to build a population and employment. [Third] is [how the activity] fits with the city — we don’t want to go into heavy industrial type of economic activity that would pollute the city.
The theme of the city will be ‘Tomorrow’s Civilization’
We’re very clear on the areas that we will be focusing on. The textile industry…because [that] type of activity needs a city life. Medical tourism…because in the region, it’s a close to $16 billion industry. Cinema is another area in terms of financial output…and the soft power it allows you. Call centers because we have a huge competitive advantage…[with a young population] that speaks multiple languages.
For you to grow in [these] area, you need infrastructure that is state of the art and that is what we are building. If we need to create free zones in some of those areas, we are in discussion with the Ministry of Investment to create some advantageous laws.
Another area we’re looking at is financial facilities. We have a huge market size, the biggest in the region, so the question here is why do big companies not open head offices in this market? Some of the investment laws that we have are not encouraging, so we [need to] create free zones; special zones within the city to attract people.
What are the design and architectural aesthetics of the city plan?
The theme of the city will be “Tomorrow’s Civilization” and that’s how we want to position that city. We want to embrace our old culture with a future accent.
If you look at the work that we have done with the architectural design that we have concluded for the new Government Park, we’ve utilized a mixture leveraging the Pharaonic, Coptic, Islamic [and] Arabic architecture. That is one of the things that impresses me about Cairo.
We [also] need to make sure that the culture component within the new city is profound. We are looking at building an opera house and art museums.
Can you describe the demographics of people who you think will relocate to the city or frequent it for work/cultural activities, based on how it is set up?
When it is fully developed, we are aiming to accommodate 5-6 million people. I have talked about different economic activities, and as a result, I think we will have the full mix of socio-economics.
The city needs to be a fully integrated city, similar to central Cairo — and again, it is an extension of Cairo. In terms of socio-economics, there’s no target. We need a blend of everybody.
One of the reasons why we have some of the slums is that you build certain kinds of homes for certain type of people and we completely ignore that there will be people serving them or working with them in whatever capacity. If you do not create homes for them and you are not creating a means of fast, affordable mass transportation, then the normal behavior of human beings is to compromise on where they will live so they don’t do these kinds of trips everyday.
We are being very mindful of that and making sure we can accommodate everybody.
When it comes to developers that are working on housing units, for example, have you set up some kind of ratio for upscale versus middle- to low-income housing?
Right now, we have the Government Park and one of the projects we are working on is for people who will work in the government. What type of homes do they need? What will be the price range?
Rather than looking at it as investments within the city, look at it in terms of how the city will provide a platform for many economic activities in which Egypt has a competitive advantage
We want to encourage people from the government to relocate to the city, not only to travel to the city [for work]. We are looking at ways to create incentives for people to move…[and] we are working with the Ministry of Housing and the Ministry of Planning on that project.
The biggest challenge will be that in some of those segments, the private sector will not make money building those types of homes, but this is where we lean on and work with the Ministry of Housing.
You talked a bit about connectivity with Cairo – can you tell us more?
Before we get to 1 million, we have to have public transportation. One of the key lines that we are working on right now with the Ministry of Transportation is a line that will connect via Adly Mansour station to the capital. The idea is if we make a few of those targeted trips, i.e. they don’t stop at all the stops from central Cairo, we’d probably be able to get them within 30-40 minutes with the electric train.
What about basic utilities, like energy and water? For example, Siemens is building one of the main power plants in the city right now. Can you talk to us about the energy mix, how the city will be powered and if any green technologies will be utilized?
In terms of water and electricity, it is all being installed right now so I do not think we will have an issue of being short on any of these from the get-go. It is not going to be an experience of not having enough water or electricity as people move in.
Mix is obviously something that we currently studying and how to encourage people to use solar.
I think the bigger question here is how we are going to manage the city. We want to create a company that will be a city management services company that manages everything in a smart way, capitalizing on the latest technology. The whole city will be covered with CCTV cameras with one control room controlling the city.
We want to utilize the latest and greatest technology.
What are the expected completion dates for different phases? What is Phase 1 and when should it be ready?
The first component is the Government Park. Most of the land we sold to developers is around that area [in order] to create a destination. There is El-Massa, which is part of the army, and it has a convention center. All of these will be interlinked. There is a residential part that was already built by the Ministry of Housing.
That’s the first phase. The president is pushing everybody to deliver that within 2018…with the aim that the government will start the move around that time.
The next component will be the financial district. We are currently in negotiation to bring one of the top commercial developers to create an anchor of retail, which is also important for economic activity.
How about the overall completion?
Cities, by default, have to grow organically. It takes 10, 20 years, even 30 years. If you look at Singapore or Dubai, this is the kind of timeframe we are talking about. Again, it is about how to continue building in a way so you continue to attract population and grow the city from a population point of view.
I think the speed at which you complete is a factor of our ability to attract population. The advantage is that we have the population and they are close by in a place that is already crowded. The motive to move is there…it all depends on our ability to make this move easier.
Can you explain the structure of the company that was created, which is working on the development of this project?
The company is actually a new model to manage within Egypt but it is a very proven model in countries around us. If you look at Dubai, this is something similar to Dubai Holding.
It is a development company; the shareholders are the NUCA (51 percent) and the army (49 percent). There is a board that has representation from each of the owners’ sides and independent board members.
The scope of the company is to focus on developing the master plan, developing the vision, strategies for the city, awarding key contractors and key developers to be sub-developers within the city, while always making sure that it all falls within…the vision of the city.
Initially this project was said to be worth about $45 billion in investments. Is that the number we are still working with, if you had to quantify the level of potential investments?
I think the number remains within this range and I think the opportunity for investment is huge.
Rather than looking at it as investments within the city, look at it in terms of how the city will provide a platform for many economic activities in which Egypt has a competitive advantage. We will have the land…we will have the flexibility to work on special laws and privileges, we have plenty of investment opportunities.
If you look at building the city, that represents huge opportunities for people in real estate, construction, building material — all of that creates a lot of potential investment and business opportunities.
