Can smart cities solve Egypt’s housing shortage?

– Digitalisation is an increasingly important concept in the Egyptian construction sector

– The government’s flagship smart cities programme could provide housing for some 30m people

– Sustainability is growing in importance, not least in light of the upcoming COP 27

– Economic uncertainty could result in a delay in the uptake of sustainable principles

Architects, property developers and other key stakeholders in Egypt’s construction sector are increasingly embracing digitalisation as the country looks towards smart city solutions to solve its housing shortage.

Reflective of the broader sea change in the sector, in February Etisalat Misr, a subsidiary of UAE telecommunications group Etisalat, and US-based conglomerate Honeywell signed a partnership deal that will see the two firms collaborate on developing digital solutions for the Egyptian construction industry.

Honeywell will provide an internet-of-things platform to enable artificial intelligence and machine learning, while Etisalat Misr will be responsible for connectivity, hosting services and software-related issues.

This deal extends the ongoing collaboration between the two companies, which have been working together in the country for several years, with a focus on the field of smart city management.

Smart cities in the desert

Egyptian policymakers have long recognised the potential of smart cities and digitally oriented architecture.

A key issue in the country is rapid population growth: the population increases in size by more than 1.5m people every year, giving rise to a chronic shortage in adequate housing. The issue is compounded by high levels of migration to cities from rural areas.

One response to the problem of housing and urban congestion is the construction of new smart cities around the country.

Smart cities leverage ICT to increase sustainability and efficiency. They consist of clusters of smart buildings that use integrated processes and creative design to self-regulate their operations and environment.

One smart city is currently under construction in the desert some 45 km from Cairo: the New Administrative Capital, which will be home to some 7m people upon completion.

Another is New Alamein City, situated on the North Coast, which is set to provide housing for 2m people. Elsewhere, December 2021 saw the launch of the first phase of the New Aswan City, which will cover more than 22,000 feddans and is expected to provide social housing for over 850,000 people.

In total, the Egyptian government’s long-term plan is to build 37 new smart cities across the country.

The initiative will generate 4m direct and 3m indirect jobs, according to the Ministry of Housing, Utilities and Urban Communities. Once completed, it is thought that the network of new cities will house some 30m people.

As a result of this drive, the country has an estimated $519bn of construction projects under way, making it Africa’s largest projects market and the third biggest in the MENA region, after Saudi Arabia and the UAE.

Indeed, the fact that Egypt was one of only a few countries to post positive GDP growth in 2020 was in part thanks to construction activity.

Smart infrastructure

Alongside housing, infrastructure projects in Egypt are increasingly focused on digitalisation.

Almost 30% of combined public investment in FY 2021/22 will be directed towards transport infrastructure.

Part of this will go to the government’s National Roads Project, which will add 7000 km to the national network. However, the most substantial investments are earmarked for railways, metro, monorail and high-speed electrical rail. Together, these projects will increase passenger capacity by more than 650m per year.

Government agencies are spearheading the introduction of new technologies to the sector.

For example, it is widely expected that a new law will mandate building information modelling (BIM) on construction projects. BIM broadly consists of digital representations of spaces, such as buildings or rooms, that help in the design, construction and maintenance of infrastructure.

The National Authority for Tunnels already uses BIM technology, having applied it in their monorail and high-speed railway projects.

Sustainability grows in importance

Alongside digitalisation, sustainability is a key element of smart construction.

Sustainability in Egyptian construction is still in its early days, with limited regulation on environmental standards. In addition, the primary concern for many buyers – and hence developers – continues to be cost.

However, the reduction of energy subsidies and the rising price of gas and electricity have created a rationale for the integration of solar power and other energy efficiency measures.

This is especially relevant ahead of Egypt's hosting of the UN Climate Change Conference 2022, known as COP27, in November this year.

However, in parallel to this, ongoing issues around inflation and the falling value of the Egyptian pound may slow progress in the rollout of sustainability measures in the construction industry.

Notwithstanding such short-term headwinds, digitalisation and sustainability should continue to grow in importance in the sector over the long term.

Indeed, there have been a number of recent innovative developments in the industry. Local design and building company Hand Over has in recent years been a forerunner in sustainable construction.

Using a technique known as “rammed earth construction”, which uses eco-friendly materials such as gravel, mud and sand, plus a small amount of cement, the company has constructed a number of sustainable housing and building projects across the country.

The technique has been shown to reduce heat and dampness in a building, leading to an estimated 30% reduction in carbon emissions on the back of lower energy usage.