To encourage foreign investment in the real estate sector and secure more USD, the New Urban Communities Authority (NUCA) announced a group of facilities and amendments to land allocation mechanisms for service, investment, and urban projects in December 2023.

The new facilities include increasing the implementation period for all service and investment projects by 20%, along with offering a grace period in return for a fee and the possibility of scheduling all due instalments of the value of the plots of land in 2023.

At the beginning of 2023, the NUCA offered new land for allocation under the new initiative, which is expected to inject new blood into the real estate industry. 

Complementary mechanisms

The Minister of Housing unveiled new measures allowing companies abroad to purchase lands in new cities and pay in USD.

The new measures allow companies co-founded by a foreign partner to apply for the allocation of lands offered by the NUCA.

The mechanism is limited to companies. Applications shall include land location and space, as well as the city in which it is located and the activity of the planned project.

Assistant Minister of Housing for the Affairs of the NUCA, Waleed Abbas, stated that applications wouldn’t be considered until the confirmation of the transfer of the required amount in USD.

Payment Options

The board of the NUCA offered three payment options for investors seeking to buy the land valued in USD.

The first option is to transfer the full price of the land in USD with a deduction of 15% of the full price. 

The second option is to estimate the instalments in EGP including interest and pay the equivalent in USD. In that case, the interest should equal that set by the Central Bank of Egypt at the due date of each instalment.

Furthermore, NUCA offered a third option which is to pay in USD in four equal instalments, including interests that are equivalent to the average yield of USD certificates of deposits at state-owned banks at the due date of each instalment. 

NUCA set the aforementioned conditions and options for land allocated for all types of activities except for industrial activities, workshops, and warehouses.

The results So Far 

In the first quarter of 2023, the NUCA’s USD land allocation initiative starts to pay off, with land reportedly allocated in a group of new cities to foreign investors and Egyptian expatriates.

In that context, Abbas revealed that 203 plots of land were sold for immediate allocation in new cities during the first two months of this year, adding that 40% of the requests came from foreign investors and companies.

He noted that NUCA had received requests for the first time from foreign investors to buy lands in the new cities with industrial activity in exchange for USD payment, adding that most proposed projects were integrated urbanization.

Last month, NUCA offered the sale of five plots of land in three cities, using a direct allocation mechanism, for total USD payments equivalent to about EGP 2.26 bn.

The lands offered include two plots in Sheikh Zayed, the first of which is dedicated to administrative commercial activity, and covers an area of 3,940 sqm for a price of 24,255 per sqm, bringing its total value to EGP 95.5 mn.

The authority stipulated that the built-up area should not exceed 30%, the height up to 3 floors, and the implementation period up to 3 years. Developers were obligated to transfer the full price in USD from abroad.

NUCA allocated 38,062 sqm of land for commercial, administrative, and entertainment projects at a price of EGP 29,190 per sqm, at a total cost of EGP 1.1 bn, provided that 90% of the land value is paid in USD in 3 equal annual instalments.

The authority stated that a referral will be made to the pricing committee to determine the meter’s price, provided that the instalments are calculated in Egyptian pounds loaded with bank interest, with payment in the USD equivalent of each of the instalment and its interest at the price of the due date of the instalment.

In the new city of Damietta, the authority offered two plots of land for integrated urban activity, the first with an area of 19.3 feddans, and the second with 19 feddans, and total values of EGP 366.3 mn and EGP 335.1 mn, respectively.

The authority indicated that the project implementation period is 4 years, calculated from the date of issuance of the first ministerial decision, and stipulated that the built-up area should not exceed 50% of the project.

In the city of October, a 40-sqm plot of land is sold for a total value of EGP 391.5 mn. The authority stipulated that the built-up area should not exceed 15% of the land, compared to 40% for detached villas, and 45% for connected and semi-connected villas within the small plot.

The project implementation period is 4 years from the date of issuance of the first ministerial decision, and the rest of the price of the land is paid in 8 equal semi-annual instalments in USD, with the first instalment due after 6 months from the date specified for paying the advance payment.