Unregulated space

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EGYPTIANS are great builders but terrible regulators. There is barely a place in the whole country where buildings of all shapes and heights are not gathered in one area, be it urban or rural. Sherine Nasr attended a seminar which showed that an accelerated movement of construction and a lack of robust and flexible building laws have helped create a situation where bribery, corruption and conceptual disharmony have become part and parcel of the sector.

However, after the executive charter of the unified construction law was approved in March, could this problem be a thing of the past? "Undoubtedly, construction has been one of the fastest growing economic activities in Egypt with real estate wealth estimated by experts to reach LE200 billion," said Minister of Housing Ahmed El-Maghrabi during a seminar recently organised by the Egyptian Junior Businessmen's Association (EJB).

The construction sector in Egypt grew by 15 per cent in 2008 compared to the previous year, despite the looming economic recession. Demand on new housing units, particularly low-income units, is always growing with some 500,000 new units being absorbed by the market every year. Moreover, government allocations for low-income housing reached LE1 billion last year.

The new building law will hopefully help regulate the market and ease up a jungle of procedures and regulations that consume both time and money. According to El-Maghrabi, under the new law, contractors will be able to issue a building licence in a week, whereas it used to take up to one year.

"But the tenants remain the weakest party of the government-constructor-owner equation and more legal action should be taken to preserve their rights," urged Hisham Shoukri, head of the real estate committee at the EJB. Shoukri explained that there are no clear criteria to compel constructors to abide by any conditions when dealing with a would-be buyer, neither are there strict penalties imposed in case a violation occurs.

As part of its responsibility to improve the business climate in Egypt, the EJB provided El-Maghrabi with a sectoral study to upgrade the real estate and construction sector in Egypt. The study touched upon the new construction law and means to activate its articles, ways to regulate the constructors and contractors' role in the sector, land allocation, finance and means to preserve the rights of would-be house owners.

"The best aspect of this study is that it embodies a vision of civil society as a whole and is not limited to advocating the rights and interests of EJB members," said Ziad Bahaaeddin, CEO of the company that produced the study.

The good news is that the Ministry of Housing is ready to embrace most of the suggestions made by EJB. One of the biggest steps in the right direction is that land allocations are now executed in full transparency.

"Keeping allotted lands to be sold later at triple their price is a thing of the past. A market that has long been governed by deformed rules will not change overnight but we will continue to provide tools to a more transparent and organised construction sector in Egypt," said El-Maghrabi.