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Sunday, March 31, 2013

The Cairo Housing Market - Part 3

That article that I referenced in part 2, offered these thoughts on Cairo housing:
Today the outer edges of the city are one vast construction site, full of subdivisions where empty million-dollar villas stand among the sand dunes...
Frenzied real-estate speculation has continued to drive development on Cairo's outskirts: houses and apartments in the new cities are sold and resold many times over before they're even built. My salesman, it turns out, lives in another new development called Dreamland, but he also bought an apartment in Madinaty "as an investment"; in the few years since his purchase, it has already doubled in value. So many people have purchased "investment" properties that, in a city with a severe housing shortage, an estimated million apartments sit empty.
 And another, more recent article notes that:
... entire new areas have developed in recent years in a process of real estate speculation that has produced millions of uninhabited square meters of residential space in the interstitial spaces between the core city and desert extensions.
And that is the most striking aspect of the housing market.  Consider these pictures.


EgyptSlums-1-3 EgyptSlums-1-2

I don't think that estimate of a million empty apartments is any exaggeration.  The article was published in March of 2010 and the numbers have only increased in the past two years.  If you held Egyptian Pounds, you'd be scrambling to get into real assets too.

But that second article that I referenced notes the real hazards:
... massive swaths of self-built districts on previously agricultural land largely rely on infrastructure that was not designed for dense urban areas. Immediate intervention and upgrading is necessary in such areas to provide not only better access to drinking water and sewage but also appropriate services such as health and educational facilities. In short, the task of confronting Egypt’s and Cairo infrastructural challenge is pressing and difficult, but it also presents opportunities for development, employment, skill-training, and overall improvement of quality of life.
Improving streets and sidewalks, long neglected by the state and international donors, is a basic infrastructural project that would have a universally positive impact on urban life.
Wait a second.  "Improving streets and sidewalks?"  Yes, they are bad.  But you can tell this is an academic writer.  The electricity is going out frequently.  Diesel fuel is in short supply - the New York Times reports gunfights over diesel (I can't find any reference to that locally, though) and the author of this article sees sidewalk improvements as having a positive impact?  I think he needs to interview a few shop owners and tourism operators.  Perhaps the real problem is an inability to prioritize.

But the critical problem is population growth.  This article puts the Egyptian population at 91 million - a remarkable increase of 18% from six years previously.  Wikipedia puts the population of Cairo at around 18 million.  A two year old article in the independent tosses out a 20 million number.  I found this chart in an academic paper.

 The problems of a young, growing underemployed population may only be beginning.

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