The Egypt Construction Market is estimated to grow at a CAGR of approximately 6% during the forecast period.
The Egyptian construction sector performed strongly during FY 2019, contributing to 6.2% of Egypt’s GDP. As a matter of fact, the sector alone grew by 8.8% in the past fiscal year, against a growth rate of 10% in FY 2018.
Expanding government investments towards environmentally sustainable, energy-efficient infrastructure is propelling the growth for Egypt Construction and Infrastructure sector.
Developing interest for Building Information Modeling, Modular development, and building materials industry is being seen over the Egypt Construction and Infrastructure market. The global trends in urbanization and industrialization, investments in rails, roadways, ports, power, and utilities all around the world and Egypt are propelling the growth of the construction sector.
The total development venture pipeline in Egypt incorporating all uber projects with a value above USD 25 million – stands at (USD 392.4 billion). The pipeline, which incorporates all projects from pre-planning to execution, is slanted towards late-stage development projects, with 70% of the project pipeline by value in the pre-execution and execution stages as of August 2019.
Key Market Trends
Capital expenditure boosts Egypt’s construction sector
The construction industry is expected to continue to expand strongly over the forecast period (2020–2025), with many investments in infrastructure, residential, and energy projects continuing to drive growth. The focus on the improvement of the transport framework and the development of sustainable, affordable housing units will be key growth drivers.
The plans of the government to increase the share of sustainable power source in the nation's total energy from 3.0% in 2016 to 20.0% in 2022 and 37.0% by 2035, will be one of the main factors to drive the growth of energy and utilities construction market over the forecast period.
To develop urban transport infrastructure, the European Investment Bank (EIB) endorsed credit of USD 212.3 million to support public transport in Greater Cairo. The project aims to develop sustainable transport infrastructure, diminish urban blockage, boost the mobility of people and services, and bolster economic growth.
The government's efforts to balance supply and demand for affordable housing will spur the growth of residential construction market over the forecast period. The construction of a new capital city to the east of Cairo, in order to advance financial development, create employment, attract the foreign investments by the Ministry of Housing, Utilities and Urban Development Egypt (MoH) is one of the major factor to drive the growth of construction and infrastructure sector during the forecast period. In March 2017, the Ministry of Transportation of Egypt announced plans to attract investments worth USD15.0 billion in new rail and metro projects across the country. Of the total investment, USD14.0 billion will be spent on three high-speed rail line projects.
New Investment Law and Focus on Transportation, Energy boosts Egypt’s construction sector
In order to promote sustainable economic growth and attract new investments, Egypt's parliament approved the New Investment Law in May 2017. Under this new law, the government will provide tax incentives and guarantees, liberalize the foreign exchange system and adopt comprehensive value-added tax (VAT) systems to attract more domestic and foreign investment into the country. The move is expected to increase the pace of foreign investment, aiding the growth of the construction industry over the forecast period.
The construction industry is expected to grow over the forecast period (2020 - 2025), fueled by the government's focus on improving energy and transport infrastructure in the country. The government plans to invest USD 3.1 billion to develop the country’s rail infrastructure by 2022. Investments in residential buildings, electricity transmission, healthcare projects, and the oil and gas sector are also expected to support the industry’s output. In June 2019, the government announced its plan to invest USD1.1 billion to upgrade the country's transmission grid network during FY2019–2020. Furthermore, the government aims to enhance the sustainability of the tourism sector, with a special emphasis on developing the country as a medical and health tourism hub.
The report covers the major players operating in the Egypt Construction Market. The market is highly competitive with many opportunities for private firms as the government is taking important steps to support the sector by collaborating with the private firms to pursue various low-income housing schemes. The market is fragmented, and the market is expected to grow during the forecast period due to the increase in the construction investments and up-coming major projects in the country and other few factors are driving the market.
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