Egyptian construction boom powered by FDI

China Daily | Updated: 2016-06-03 07:29

Foreign direct investment from countries such as China is driving rapid growth in the nation

Foreign direct investment in Egypt jumped by nearly 50 percent year on year in 2015 to $6.4 billion and that impressive performance is forecast to continue as the country embarks on a massive infrastructure construction program with the help of investors from countries such as China.

Egypt, which has a population of 82 million people, has also experienced a positive trend in GDP growth, with an uptick of around 5 percent forecast for 2016.

The recent expansion of the Suez Canal - one of the world's most famous and important waterways - has repositioned Egypt as a trade and logistics hub and prompted a flood of investment in new trade and industrial zones.

Chinese investors are among those taking advantage of the many opportunities the enlarged canal will offer and have acquired 6 million square meters of prime industrial real estate in the north-west vicinity of the Suez Canal.

Headquartered in Cairo, Orascom Construction is a global engineering and construction giant primarily focused on infrastructure, industrial and high-end commercial projects in the Middle East, North Africa, the United States and the Pacific Rim for public and private clients.

With around 53,000 employees in more than 20 countries, Orascom Construction is listed on NASDAQ Dubai and the Egyptian Exchange. The company operates under three distinct and separate brands: Orascom, Contrack and the Weitz Company.

The firm targets large, complex and demanding industrial, commercial and infrastructure projects that by their nature attract fewer competitors and have higher margins. With an emphasis on turnkey contracting, Orascom's track record ranges from water treatment plants and power stations to five-star hotels and office skyscrapers. Orascom has earned a reputation for safely delivering quality work under difficult conditions on-schedule and at competitive prices. The company prides itself on the groundbreaking quality of its work.

"If Egypt decides to develop its infrastructure, we see ourselves as a catalyst for the growth and development (of the country), and if you look at it from the business perspective, we are one of the major beneficiaries of this development," said Orascom CEO Osama Bishai. "We are working on the power sector and are satisfied that we completed a mentionable portion of the fast track power generation program launched in late 2014.

"We are also taking a decent share of about 20-30 percent from the 4,000-kilometer road network improvement plan the government launched. In addition, we are awaiting a concession to start a wastewater treatment plant which will reach a wide audience and, of course, will improve the quality of life."

Orascom is keen to play its part in further enhancing Sino-Egyptian cooperation. "We are already in contact with some Chinese partners who are particularly related to the transport sector, as in railways," Bishai added. "We also have met with some contractors from the energy sector."

Diverse, but sport focused

Wadi Degla Holding is another highly successful and diversified group and it is known as much for its football clubs as its prime real estate portfolio. The company has a broad range of operations, including sports facilities, telecommunications, real estate developments and industrial projects.

Nestled strategically in some of Egypt's most prime locations, Wadi Degla Holding's integrated real estate operations comprise five high-end residential compounds and five weekend housing getaways. The projects are located at Ain El Sokhna, New Cairo, Maadi, 6th of October City, Hurghada, and North Coast, with similar developments in the pipeline.

"Egypt has one of the strongest economies in the region, which has enabled our company to grow because of the stability and security of the country, its large population and significant resources," said Adel Samy, president of Wadi Degla Holding. "This is why I would encourage investors to come and invest in Egypt, especially as the government is encouraging substantial FDI and trying to reduce bureaucracy and taxes.

"Our major business is sporting clubs - real estate came as a complementary offering to our members - so I would categorize Wadi Degla as a sports brand. We have made some comparisons between our turnovers and profitability and are in the top 10 related to other sports brands."

Moving forward, the company is eager to team up with foreign partners. "Our company is open to joint ventures with Chinese companies or firms from other countries," Samy said, before commenting on where such opportunities may exist. "We have an agricultural company that started five years ago. We bought 2,500 acres of land and cultivate and export some of the products. We are now investing both in food business and education."

InFocus provided this story.

Egyptian construction boom powered by FDI