Egypt Infrastructure Report Q1 2008

The Arab Republic of Egypt in northeastern Africa is home to a vibrant construction industry. The sector has witnessed strong growth in the recent past on account of growing investments from the Gulf countries and state-led programmes of economic reform. With major privatisation and investment activity expected in the Egyptian infrastructure sector during 2007-2008, this uptrend is likely to continue. This report forecasts Egypt's domestic construction industry to log an average growth rate of 5.71% over the 2008- 2012 period.

Recent state initiatives to evolve an integrated transport strategy, construct 14 new cement plants and implement eight new oil and natural gas projects have added impetus to the rising infrastructure investments. Other major infrastructure projects span across tourism, transport, development of airports and ports, and industrial construction. Growing tourism into Egypt - expected to reach 15mn visitors per annum by 2010 - has made the local hotels and resorts industry a hotbed for foreign investment. Further, investments in development projects under the State Development Plan 2007-2012 are soon expected to top US$2bn.

All, however, is not well with Egypt's construction industry. Though most construction requirements are satisfied locally, rising fuel costs and removal of subsidies have resulted in soaring costs and irregular supplies. Its other negatives stem from rising real estate costs making housing unaffordable for a large portion of the Egyptian population. Moreover, with past attacks such as the one on the Red Sea resort of Sharm el-Shaikh in July 2005, the threat of terrorism continues to impact tourism revenues.

Notwithstanding these factors however, a mix of right policies and state-led infrastructure projects will continue to drive the Egyptian construction sector and also encourage foreign investment in the country.

BMI forecasts the industry to rise from an estimated US$4.83bn in the year 2007 to over US$5.01bn by 2008 and further to near US$9bn by the year 2012.