New Construction research report from Business Monitor International is now available from Fast Market Research
Boston, MA -- (SBWIRE) -- 08/30/2013 -- Construction activity in Egypt continued to slow in FY2012, in line with our expectations it reported 3.3% year-on-year real growth. As the sector has continued to face significant challenges, we forecast even slower growth for FY2013 with 2.9%. We expect real growth to pick up again from 2016, maintaining an average annual growth of 5.3% to 2022. However, construction growth in Egypt is dependent upon demand for projects and foreign investment. Given the current unstable - and further deteriorating - political climate, we remain cautious over the medium term.
Despite our expectations for a pick-up in growth, we believe that the country's highly uncertain policy backdrop will continue to undermine greenfield investment. Political risk has particularly affected the inflow of foreign direct investment. We have seen total foreign direct investment decrease rapidly since 2008, reaching bottom low in FY2011/2012 with only US$2.1bn. On the demand side, sub-par economic growth will continue to weigh on the residential and commercial construction sectors.
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Key Trends And Developments
- In November 2012, the European Investment Bank approved a EUR600mn loan for the Cairo Metro-Line 3 project and has released the first EUR200mn tranche. The loan is for the third phase of the Line 3 construction, extending the existing line by 17.7km, which will include 15 new stations. The first phase of the east-west metro line was inaugurated in February 2012, running 4.2km, from Attaba to Abbasia in eastern Cairo. The second phase is under construction and due to be completed by 2014, and the third phase is in the design stage. The loan is for an extension that will take the line under the Nile to the western sections of Cairo.
- It was announced in March 2013 that Egypt's Ministry of Energy and Electricity is seeking to issue tenders for three local power generation projects, which will have a total power generation capacity of 5,500 megawatts and involve the investment of nearly EGP50bn (UIS$7.42bn). The Egyptian government also announced that it intends to establish the country's first nuclear power plant. The facility is scheduled to begin operations by 2020. Moreover, the government intends to develop a total of four nuclear power plants with a combined power capacity of 4,000 megawatts by 2025.
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