The chairman of the company undertaking the construction of Egypt’s New Administrative Capital City Project, Administrative Capital for Urban Development (ACUD), Khaled Abbas, recently announced the company’s intention to float 5-10% of shares in the company for sale on the stock exchange. However, the value of the shares to be floated is yet to be disclosed to the public. Currently, the company’s ownership is shared between the Egyptian military (51%) and the government’s New Urban Communities (49%).

The Administrative Capital for Urban Development is the company responsible for the development of Egypt’s new capital city located 45 km east of Cairo. The development of the city began in 2015, but has halted multiple times with one of the reasons being financing. According to Our New Cities Factsheet, New city developments are a time consuming endeavour and typically take between 15 – 25 years before completion.

Due to difficulty in land acquisition and the financial cost of building a new city, 13.3% of new city developments on the continent have been abandoned.

In 2019, the former chairman of ACUD, Ahmed Zaki Abdeen, stated that the project needed financing of about $58 Billion, thereby underscoring the importance of the planned IPO.

Details and Status of the New Capital City Project

Egypt’s New Administrative City Project was introduced in 2015 as part of the Egypt Vision 2030 with construction of the city’s first phase beginning in the same year. This phase of the development covers 168km² and is expected to house approx. 6.5 million people will comprise:

• ministries, 
• residential neighbourhoods, 
• a diplomatic quarter, 
• a financial district, 
• a mosque and a cathedral.

While the city is still undergoing construction, Khaled Abbas mentioned that some aspects are ready with the entire government including the parliament already moved in by the end of 2023.

Egypt is a major developer of New City Developments

According to Estate Intel, Egypt ranks as the top destination for new city developments in Africa accounting for 32.2% of new city projects across the continent. This is a result of Egypt’s growing population of 100 million, which is expected to hit the 180 million mark within the next 30-40 years. As such, the new cities are key for providing adequate amenities, employment, housing and infrastructure.

In addition to the New Administrative City, similar Egyptian projects in the pipeline include Al-Galala City (68km²) developed by the Egyptian government and Madinaty City (33.6km²) developed by Talaat Mustafa Group. Furthermore, government organisations are the biggest funders of new city developments accounting for 47.8% of funding for ongoing projects across the continent, with private funding (45.7%), and hybrid funding (6.5%) accounting for the rest.  

The completion of the new cities will ease the pressure on current urban centres, with allowance for over 6.5 million inhabitants in the NAC alone. Furthermore, the development of  new cities will allow for smart infrastructure to be established within the cities. Currently, the New Administrative City is one of the smart new cities built to be 100% smart. 

ACUD’s IPO will be the first of its kind in Africa

So far, no IPO has been offered to finance a new city development on the continent, which will make the ACUD move a first in Africa. The success of this move could encourage more developers to opt for this moving forward. As mentioned earlier, only 5-10% of the shares will be floated from the IPO, however, the impact of this on the current ownership structure between the Egyptian military and the government’s New Urban Communities is unknown.

 

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