The Causes and Effects of Urban Sprawl in Cairo

The Causes and Effects of Urban Sprawl in Cairo

The exodus of Cairo’s middle and upper classes to high-end suburbs and gated communities, in search of an escape from the city’s chaos and pollution, only accelerates every year as the population rises. This is a city “so large it had to turn itself inside out,  transforming its periphery into its core whilst condemning the previous center to a life on the margins,” in the words of award-winning journalist Jack Shenker, who spent two years producing an essay on the transformation.

“When we speak about the population of Greater Cairo at the moment, we’re speaking of around 20 million people— it’s growing at a very fast pace,” according to JLL country head Ayman Sami. As the buildings inside the city are not well-maintained and become more debilitating, residents prefer to move to the outskirts, he explains. More buildings inside the city are not clean or adequately painted, the urban infrastructure is not supportive of population growth, and access to the right public transport is not always available. Retail, office spaces, and malls follow suburban migration trends, although Nile-side hotels have maintained their appeal to incoming tourists, often recording high occupancy rates despite the overall relatively low level of tourist inflows.

In the rare case that a land plot is available for sale inside the city, high prices make it difficult for projects to become feasible or even profitable, resulting in a large number of land plots in the downtown area that have been on sale for several years.

East versus West

In proximity to the new Administrative Capital and the Cairo Airport, demand for units in New Cairo in East Cairo has picked up as consumers follow prospective or current employers. West of Cairo and encompassing areas, such as 6th of October City where occupancies began earlier, movement is more driven by social or cultural factors affecting consumers, such as proximity to extended family members, as opposed to economic factors leading corporates (and their talent pool) to head east, Sami mentioned.

However, Basil Kamel, a professor of architecture and urban theory at the American University in Cairo, believes that East Cairo is “somewhat saturated” for the time being, while the West’s residential market is picking up once again. “Now, there should be transportation directly between 6th of October City and New Cairo, which would change the dynamics completely,” according to Kamel. Public transportation is lacking in New Cairo, while discussions concerning the Cairo Metro expansions to a couple of the satellite cities are long overdue.

“People are affected by what goes on in the market; they are losing money and are very worried,” said Ahmed Khaled, Property Advisor at Emaar Misr, “yet I see unparalleled demand in New Cairo. Even those already owning units want an upgrade.”

Increased occupancy rates in the West and East alike a few years back highlighted the gap between rich and poor, according to a Reuters feature that ran in 2008, when the dollar was changing hands at around EGP 5.

Attractive Payment Terms

“No matter how high the price of a property is, long-term installments and agreeable payment terms allow closing a deal to become much easier,” said Mahmoud Ahmed El Saadi, Sales Director and Chairman of IProperties Real Estate. Six to eight-year installment plans are a relatively new concept in the market, which have only been introduced as recently as the past few years.

“Developers play a lot with payment terms…You hardly see a time where real estate prices have dropped—you see a time where they stabilize, or where they are cheaper on the secondary market, but they never go down,” Sami stated. Prices cannot follow devaluation because the affordability and consumers’ income levels have barely changed. As villas become more expensive, developers follow demand by reducing the sizes of their units in order to meet the expectations of their buyers. “There is a shift driven by the affordability of the consumer and how much they are willing to pay.”

The recent floating of the EGP may affect the retail market negatively in the short term due to higher import prices, VAT, and subsidy cuts affecting consumers’ purchasing power. However, recovery is expected as the currency stabilizes, the availability of FX increases, and more foreign developers enter the market in hopes of capitalizing on the young population base, JLL’s Q3 2016 Cairo Real Estate Market overview notes. Out of over five real estate brokers surveyed by Invest Gate, all expressed positive sentiments concerning the future of sector and agreed that demand is due to pick up.

“People still love real estate; they believe that real estate is a very good, safe way to store value against devaluation. So we are bullish about the market,” SODIC Managing Director Magued Sherif previously stated.

Room for Improvement

“If you look at Cairo through Google maps, there are no open spaces…and nobody asks, wait a minute, ‘how can I improve this community?’ [in terms of living environment],”says Kamel. As more institutions and economic centers are moved to the outskirts of Cairo, insufficient effort is made to look into how those remaining in the city can be linked to the newly-built hubs. In addition to restructuring roads and transportation, another potential area for improvement is, Kamel believes, setting adequate benchmarks for forming new communities in the outskirts. The different ministries need to be in dialogue for a more concrete direction to be put in place, he stresses.

“There is a lot of wealth in medieval Cairo and in our heritage, which should be polished…and further connected,” Kamel added. Ismailia, Minya, and Aswan all present opportunities as cities that could be further developed as opposed to building satellite cities from scratch which often, such as the likes of Sadat City, become ghost towns later down the line.

Lifestyle Upgrade

Of over 10 homeowners who spoke to Invest-Gate, traffic and congestion were the  common threads all shared as a major factor contributing to their decision to relocate. Prestige and proximity to better schools were some of the other factors mentioned, although the appeal of a more convenient lifestyle remained the primary factor, as well as the potential for future investment and returns when prices increase.

“When I moved seven years ago, my daughter was young and I needed a garden and a swimming pool, Zamalek had become too stifling…I had been living in Denmark and was used to something different,” said Hala Ibrahim Hussein, CFO at the Embassy of Denmark and resident in an upscale compound in 6th of October City. Hussein willingly chooses to commute to Zamalek from the suburbs every day for her day job, although she owns an apartment in the city.

For an unemployed man in his mid-twenties living in Dokki, whose parents have purchased future homes for their sons as an investment, “[here] the neighbors are intrusive and we have no privacy; the bawab and the neighbors stare and question your actions, who you’re bringing over. However, 6th of October is too far—at least here we are closer to Downtown and the metro.”

“The social component plays a large role,” says Kamel, arguing that with the shift from a past where one would walk to the neighborhood grocery store or club to a new reality of delivering everything to our doorstep, people had less at stake when they decided to relocate to the outskirts since the culture of becoming acquainted with neighbors disappeared. Instead, many prospective homeowners join new compounds and gated communities following encouragement from friends or family who have done the same. Social circles, as opposed to affordability, play a larger role in maximizing the influx outside the city.


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