Housing Study for Canal Governorates Final

HOUSING STUDY FOR CANAL GOVERNORATES

FINAL

October 20, 2008 This publication is made possible by the support of the American People through the U.S. Agency for International Development (USAID). The contents of this report are the sole responsibility of BearingPoint, Inc and/or its implementing partners and do not necessarily reflect the views of USAID or the United States Government.

HOUSING STUDY FOR CANAL GOVERNORATES

FINAL

TECHNICAL ASSISTANCE FOR POLICY REFORM II CONTRACT NUMBER: 263-C-00-05-00063-00 BEARINGPOINT, INC. USAID/EGYPT POLICY AND PRIVATE SECTOR OFFICE OCTOBER 20, 2008 AUTHORS: DAVID SIMS, HAZEM KAMAL AND DORIS SOLOMON SO 16

DISCLAIMER: This report is made possible by the support of the American people through the U.S. Agency for International Development (USAID). The contents of this report are the sole responsibility of BearingPoint, Inc and/or its implementing partners and do not necessarily reflect the views of USAID or the United States Government.

CONTENTS

List of Tables ...... iii Acronyms...... v

FOREWORD...... VI Background ...... vi TAPR II Housing Team...... vii

EXECUTIVE SUMMARY AND KEY FINDINGS ...... IX I. Housing Market Behavior ...... ix II. Expressed Demand For Housing Units...... xii III. Occupied Housing Stock ...... xv IV. Building and Neighborhood Characteristics...... xvi V. Household Characteristics ...... xvii

CHAPTER 1: INTRODUCTION...... 1 1.1 Structure of the Study ...... 1 1.2 The 2008 Housing Demand Survey...... 1 1.3 Background on Urban Canal governorates Demographics and Administrative Boundaries...... 2

CHAPTER 2: BUILDING AND NEIGHBORHOOD CHARACTERISTICS ...... 3 2.1 Introduction ...... 3 2.2 Building Characteristics ...... 3 2.3 Neighborhood Characteristics...... 6 2.4 Characteristics of Unoccupied Units in Buildings ...... 7

CHAPTER 3: HOUSEHOLD CHARACTERISTICS ...... 9 3.1 Introduction ...... 9 3.2 Household Characteristics ...... 9 3.3 Household Finances ...... 13

CHAPTER 4: CHARACTERISTICS OF OCCUPIED HOUSING STOCK ...... 18 4.1 Introduction ...... 18 4.2 Housing Unit Types...... 18 4.3 Housing Unit Sizes, Number of Rooms and Crowding ...... 19 4.4 Housing Unit Amenities...... 21 4.5 Housing Unit Improvements...... 22 4.6 Expressed Housing Unit Satisfaction...... 22 4.7 Housing Tenure Status and Security ...... 23

CHAPTER 5: HOUSING MARKET BEHAVIOR ...... 25 5.1 Introduction ...... 25 5.2 General Housing Dynamics ...... 25

5.3 Housing Rents and Rental Systems Under New Rent Law...... 30 5.4 Housing Purchase Systems and Prices 2003-2008 ...... 33 5.5 Current Housing Providers...... 35 5.6 Housing Rents and Prices Compared to Perceived Values ...... 37

CHAPTER 6: EXPRESSED DEMAND FOR HOUSING UNITS...... 40 6.1 Introduction ...... 40 6.2 Magnitude of Expressed Demand and its Determinants ...... 40 6.3 Socio-Economic Characteristics of Housing Demanders...... 42 6.4 Demand for Built Units Versus Land...... 43 6.5 Demand by Location and Mobility...... 43 6.6 Demands by Tenure Type ...... 44 6.7 Financing and Financing Preferences ...... 45 6.8 Knowledge of and Preferences for Government- Supported Housing Programs...... 46 6.9 Characteristics of Demanded Units ...... 47

ANNEX A: CANAL GOVERNORATES PRIMARY SAMPLING UNITS ...... 48

ANNEX B: CENSUS POPULATIONS OF CANAL GOVERNORATES ...... 50

LIST OF TABLES Table 2.1: Year of Building Construction...... 4 Table 2.2: Number of Units in Building...... 4 Table 2.3: Distribution of Surveyed Buildings by Number of Floors...... 4 Table 2.4: Mean and Median Number of Units in a Building by Household Income Quintiles...... 5 Table 2.5: Mean and Median Street Width by Income Quintiles ...... 5 Table 2.6: Distribution of Surveyed Buildings by Width of Street They Front ...... 5 Table 2.7: Distribution of Sampled Buildings by Ratio of Building Height to Street Width...... 6 Table 2.8: Formality of District by Income Quintiles...... 6 Table 2.9: Surveyed Unoccupied Units by Tenure and Condition ...... 8 Table 3.1: Head-of-Household Gender and Age by Income Quintiles...... 9 Table 3.2: Household Members of Marriageable Age by Marital Status and Gender...... 10 Table 3.3: Level of Education for Household Members over Age 10...... 11 Table 3.4: Head-of-Household Level of Education by Household Income Quintiles ...... 11 Table 3.5: Head-of-Household Employment Status by Household Income Quintiles...... 12 Table 3.6: Surveyed Households by Annual Income ...... 14 Table 3.7: Annual Household Income by Quintile (LE) ...... 14 Table 3.8: Total Surveyed Annual Household Income by Income Source...... 15 Table 3.9: Annual Household Expenditure by Income Quintiles (LE) ...... 15 Table 3.10: Average Percentage of Different Expenditure Categories to Total Household Expenditures by Income Quintiles ...... 16 Table 3.11: Housing Expenditures ...... 16 Table 3.12: Assets Owned by Surveyed Households ...... 17 Table 4.1: Average Number of Building Floors by Housing Unit Types...... 18 Table 4.2: Surveyed Households by Current Gross Housing Size ...... 19 Table 4.3: Surveyed Households by Current Net Housing Size and Income Quintiles...... 19 Table 4.4: Average Net Housing Area per Capita by Income Quintiles ...... 20 Table 4.5: Average Net Housing Area per Capita by Tenure Types...... 20 Table 4.6: Average Net Housing Area per Capita by Unit Types...... 20 Table 4.7: Mean Number of Rooms and of Bedrooms by Income Quintiles...... 21 Table 4.8: Availability of Amenities in Housing Units of Canal Zone...... 21 Table 4.9: Relation between Dissatisfaction with Current Housing and Expressed Demand ...... 22 Table 4.10: Distribution of Households by Tenure Types ...... 23 Table 4.11: Distribution of Households by Tenure Types and by Income Quintiles (%) ...... 23 Table 5.1: Previous Residences of Surveyed Household Heads...... 26 Table 5.2: Distribution of Households Moving in Last Five Years by Tenure of Acquired Unit ...... 27 Table 5.3: Tenure Types for Those Who Moved in the Last Five Years by Income Quintiles...... 28 Table 5.4: Means Used to Search for Housing ...... 29 Table 5.5: Distribution of Tenants According to Actual Rent Paid Under Old and New Laws as of 2008 ...... 29 Table 5.6: Length of Rental Period...... 31 Table 5.7: Rent to Income Ratios for New Rent Contracts in the Last Five Years, by Income Quintiles ...... 32 Table 5.8: Mode of Purchase by Income Quintile (Percent) ...... 33 Table 5.9: Prices Paid to Purchase Units Relative to Annual Income, by Quintile for Those Purchasing in the Last Five Years...... 33

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Table 5.10: Prices and Payment Models in the Formal and Informal Sectors in the Last Five Years...... 34 Table 5.11: Sources of Financing for Housing in the Last Five Years ...... 34 Table 5.12: Details of Purchased Units 2003-2008 by Year (Cash Purchase) ...... 35 Table 5.13: Purchased Housing Units Distribution by Type of Building Owner ...... 35 Table 5.14: Rented Housing Units Distribution by Type of Building Owner...... 36 Table 5.15: Current Value of Occupied Units According to Respondents ...... 37 Table 5.16: Current Perceived Value of Occupied Units of Gross Area ...... 38 Table 5.17: Perceived Current Values for Units Acquired in the Last Five Years by Year ...... 38 Table 5.18: Current Rents as a Percentage of Perceived Market Values, 2008 Average ...... 39 Table 6.1: Breakdown of Demanders by Household Income Quintiles...... 41 Table 6.2: Demanders Distribution by Age...... 42 Table 6.3: Educational Status of Demanders...... 42 Table 6.4: Distribution of Employed Demanders According to Monthly Income ...... 43 Table 6.5: Number of Preferred Years for Apartment Demanders to Pay by Installment ...... 44 Table 6.6: Number of Preferred Years for Apartment Demanders to Pay Rent...... 44 Table 6.7: Distribution of Apartment Demanders According to Total Housing Unit Area Being Sought ...... 47 Table A.1: List of PSUs in Canal Governorates...... 48 Table B.1: Census Populations of Canal Governorates ...... 50

ACRONYMS

CAPMAS Central Agency for Public Mobilization and Statistics EHS Egypt Housing Survey

GC Greater Cairo

GCHS Greater Cairo Housing Survey GOE Government of Egypt

HH Household

HHH Head-of-Household HIECS Household Income, Expenditure, and Consumption Survey

LE Egyptian Pound

MENA Middle East and North Africa MHUUD Ministry of Housing, Utilities, and Urban Development

MOI Ministry of Investment

NHP National Housing Program PSU Primary Sampling Unit

SOW Scope of Work

SPSS Statistical Package for the Social Sciences TAPR II Technical Assistance for Policy Reform II

TOR Terms of Reference

UNDP United Nations Development Programme USAID United States Agency for International Development

FOREWORD

BACKGROUND In 2006, the Minister of Investment asked TAPR II to conduct a housing demand study to provide a comprehensive understanding of the characteristics and general profile of housing demand for Greater Cairo. The Greater Cairo Housing Survey (GCHS), conducted during December 2006 - January 2007, covered the urban areas of Greater Cairo including, the Governorate of Cairo, Giza City, and Shubra el Kheima City. It was a representative household sample survey of 9,082 households based on a detailed questionnaire which included sub-sets on buildings, household individuals, and those currently seeking housing. The results of the GCHS survey has greatly improved the understanding of urban housing markets, housing demand, and housing issues, and can be considered the information cornerstone of current efforts at housing sector reform within the ministries of housing and investment, as well as the reference point for a wide range of institutions and researchers concerned with Egypt's housing sector. However, the GCHS only covered about 43 percent of urban households in Egypt. Thus it is very difficult to generalize about the state of housing markets and dynamics for other towns and cities in Egypt or for the urban housing sector as a whole. Furthermore, the GCHS did not attempt to cover a considerable segment of the population which lives in areas which are classified as rural but which are for all intents urban in character and which are undergoing very rapid housing expansion. These emerging and peri-urban areas need to be investigated in any thorough analysis of housing issues. In late-2007, MHUUD and MOI requested that TAPR II expand the recent GCHS to include a broader sample of urban areas across Egypt. With USAID approval, TAPR II enlisted, through competitive selection, the services of the firm El Zanaty and Associates to carry out the 2008 Egypt Housing Survey (EHS) with a sample of 23,460 households that would produce statistically representative results for the following discrete geographic areas: 1. Urban Greater Cairo (Governorate of Cairo and cities of Shubra el Kheima and Giza); 2. Alexandria Governorate; 3. Urban areas of Delta Governorates; 4. Urban areas of Upper Egyptian Governorates; 5. Urban areas of Canal Cities Governorates; and 6. Peri-urban areas around Greater Cairo (4 marakaz in Giza and 4 marakaz in Qaliubia). To draft the 2008 EHS questionnaire, TAPR II started with the GCHS questionnaire and used feedback from the earlier GCHS to revise and improve its content. The EHS questionnaire was then submitted to peers and interested stakeholders for review in February 2008. The EHS data collection took place between late-March and end-June 2008. Like the GCHS, the 2008 EHS is the first survey of its kind during the last 30 years.

As requested by MHUUD and MOI, TAPR II will analyze the 2008 EHS housing data and produce seven region-specific reports. The list of reports will include: 1. Alexandria Governorate; 2. Urban areas of Upper Egypt Governorates; 3. Urban areas of Canal Cities Governorates; 4. Urban areas of Delta Governorates; 5. Urban Greater Cairo; 6. Peri-urban areas around Greater Cairo; 7. All of Urban Egypt; and The Canal Governorates report represents one of the seven reports listed above.

TAPR II HOUSING TEAM The production of the above-mentioned reports and the related housing demand survey are the result of a combined team effort that was directed by Dr. Tham V. Truong, Task Manager, Reviewer and Technical Editor. The TAPR II housing team includes: David Sims Senior Housing Specialist Kamal Selim Senior Statistician and Survey Advisor

Hazem Kamal Junior Housing Specialist Doris Solomon Junior Statistician In addition to providing statistical guidance to housing specialists, Kamal Selim led the design of the survey and the selection of the survey firm. He oversaw the data collection and tabulation that were performed by the survey firm. He also drafted the survey methodology report and provided the guidelines for the formatting of the 2008 EHS data set that interested housing researchers could gain access to by contacting MHUUD. In addition to the drafting team, other contributions were made as follows: Shereen Abdelaaty Stylistic Editor Ghada Mahmoud Translator El-Zanaty & Associates provided input that shaped the final format of the survey questionnaire and carried out all survey fieldwork between late-March 2008 and end- June 2008. The survey firm worked with CAPMAS to gain access to sampling data. It also performed the data tabulations that were needed by the TAPR II housing specialists to analyze the above-cited housing demand reports. The TAPR II Housing Team received useful and continuous support from Sahar Tohamy at the Ministry of Housing and Sherif Arafat Oteifa and Nesma Mostafa Abas at the Ministry of Investment. Their contributions are very much appreciated. The TAPR II Housing Team would also like to acknowledge the contribution of CAPMAS, who granted El-Zanaty access to the data of its master sample. Without the data from the CAPMAS master sample, TAPR II would not have been able to have the 2008 EHS executed and draft this factually rich report.

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Finally, the TAPR II Housing Team would like to thank their colleagues and peers for their reviews of and comments and inputs to the TAPR II draft reports. These comments and inputs have greatly enhanced the quality of the analyses and presentations in these reports.

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EXECUTIVE SUMMARY AND KEY FINDINGS The Housing Study for urban Canal Governorates uses survey data that were collected in May and June 2008 as part of the TAPR II EHS. The sample size for urban Canal Governorates is 1,300 households. The sampled households live in 949 buildings. A summary of principal sample characteristics follows.

Sample Summary Number of PSUs 65 Number of Households 1,300 Number of Individuals 5,492 Number of Buildings 949 Number of Demanders 77 Number of Households with Demanders 75

This report presents only the most direct and useful results of the Survey for urban Canal Governorates due to time and resource constraints. Key findings regarding housing market behavior, expressed demand for housing units, occupied housing stock, building and neighborhood characteristics and household characteristics are summarized in this Executive Summary.

I. HOUSING MARKET BEHAVIOR Residential Mobility It is low as, on average, only 5 percent of households move every year, and 27 percent move within five years.1 Such mobility rates are quite high when compared to other urban areas in Egypt. Residential mobility is also localized as 90 percent of household heads who had lived in a previous residence had moved from within the same area or city. Market Exchanges versus Non-Market Exchanges Of the households who moved in 2003-08, 35 percent of housing units exchanged took place through the market and 65 percent of moves did not exchanged through market mechanisms.2 Of the units exchanged through the market, new rent law was the most frequent form of tenure (27 percent). As for non-market exchanges, a noteworthy 26 percent of households secured their housings units through the government. Households who moved in 2003-08 were represented almost equally by each household income quintile, except for a slight under-representation in the highest quintile.

1 Estimates are rounded to their closest units in the Executive Summary. More accurate one-decimal- estimates can be found in the main report. 2 Market exchanges are defined to include new rents and ownership by purchase in the market. Non-market exchanges include: government rent, old rents, ownership by purchase from government, ownership by construction, and ownership by inheritance, gift and in kind privilege.

New Law Rental Markets Survey data show that New Law Rental markets are expanding as: • For those households who moved in 2003-08, New Rent systems account for 27 percent of all moves, and 77 percent of all moves which represented exchanges through housing markets; and • For household members who had moved away from the surveyed households in 2003-08, half concluded New Rent contracts in their new dwellings. Housing Market Information Information on housing markets is obtained mainly through informal/casual means. Less than 1 percent of the units which were exchanged in 2003-08 were found through newspapers and advertisements. Market Distortions and Rent Control Survey data show that rent control distorts the housing markets in urban Canal Governorates, where 12 percent of surveyed households enjoy fixed rents under the Old Rent Law. Not only do Old Rentals represent a portion of the housing stock effectively excluded from market exchanges, the rents being paid under the Old Rent Law have no relation to market prices as, according to the survey data: • 36 percent of Old Renters pay only LE 50 or less per month while none of the New Renters pay this amount; and • The median rent for Old Renters is LE 75 per month whereas the median rent for New Renters is roughly LE 229 per month – three times the median Old Rent. Characteristics of Informal Housing About 24 percent of housing units surveyed in urban Canal Governorates are considered by inhabitants to be located in informal neighborhoods. These inhabitants are poorer on average. Housing in informal areas is significantly cheaper to purchase than that of formal areas: • 24 percent of the units purchased in 2003-08 were in informal areas; • The median price of these purchased units was LE 25,000 in informal areas versus LE 50,000 in formal areas; • The median housing area was 70 m2 in informal areas versus 75 m2 in formal areas; and • Rentals under the New Rent law were lower in informal areas than in formal areas as the median monthly rent was LE 200 in informal residential areas compared to LE 250 in formal residential areas. Housing Rents and Rental Systems Under New Rent Law 93 survey respondents acquired rental units in 2003-08 under the terms of the New Law (or 77 percent of all housing market transactions during that period). As a group, they display the following characteristics:

• 95 percent had written contracts and, of these, 97 percent of households had kept a copy of the contract; • Only 12 percent of contracts were registered or endorsed at the Real Estate Registrar (shahr el aqari); • 61 percent had a length of two years or less while only 10 percent had a length of five years; • Monthly rent values are clustered in the LE 200 to 400 range and very few new rental contracts are each valued at over LE 400 per month; and • New Law rents are burdens on households (especially poorer households) – as evidenced by rent-to-income ratios of 28 percent for 1st quintile and 11 percent for 5th quintile - but these ratios are well within international norms. Current Housing Providers Of the housing units purchased over the last 5 years, 47 percent were purchased from the building owner/developer and 53 percent were purchased from the previous owner of the unit. Of the 47 percent, 90 percent of households purchased their units from the government or para-statal organizations. Of all 93 rentals under the New Rent Law by surveyed households in 2003-08, 47 percent were rented from building owners and 53 percent were rented from owners of the units. Of the 47 percent, only 2 percent rented their units from the government. Housing Rents and Prices Compared to Perceived Values All 1,300 surveyed respondents indicated that: • 18 percent of all units are valued at less than LE 30,000; 45 percent are valued at under LE 50,000; and only 2 percent of all units are valued at above LE 300,000; • The average market rent of their units under the New Rent Law is LE 362 per month and the median market rent LE 300 per month; and • Actual rents are nearly the same as perceived market rents under the New Rent Law, whereas actual rents under the Old Rent Law are 28 percent of perceived market rents.

The following table summarizes key indicators related to housing market characteristics.

Housing Market Behavior Summary Average Residential Mobility Per Year 5% Residential Mobility Over the Last 5 Years 27%

Total Households Living in Informal Areas 24%

Median Price of Purchased Units in Formal Areas (2003-08) LE 50,000 Median Price of Purchased Units in Informal Areas (2003-08) LE 25,000 Median Rent Under New Rent Law in Formal Areas LE 250 Median Rent Under New Rent Law in Informal Areas LE 200

Median Rental Period under New Rent Law (2003-2008) 2 years Annual Rent to Income Ratio for New Rent Law (2003-08) 22% Purchase Price to Income Ratio 3.4

% of Units Sold on Market (2003-2008) 35% Units Purchased from Individuals/Informal Developers (2003-08) 7% Units Rented from Individuals/Informal Developers (2003-08) 98%

Actual Rent of Old Law Units versus Perceived Value 28% Actual Rent of New Law Units versus Perceived Value 93%

Median Perceived Value of Occupied Units LE 60,000

II. EXPRESSED DEMAND FOR HOUSING UNITS The 2008 Survey has identified only 77 demanders out of 5,492 persons (the number of members of all the households sampled). Due to the small size of demanders, readers should be cautious in generalizing the findings and conclusions listed below. Magnitude of Expressed Demand and its Determinants Less than 2 percent of all individuals living in urban Canal Governorates are actively seeking housing units; these individuals are found in 6 percent of all households in urban Canal Governorates. Identified demanders cited the following reasons for seeking a housing unit: to be able to get married (46 percent); the present unit is too small (7 percent); changing tenure status to ownership (18 percent); nuclear family wants to live independently (21 percent); and other reasons (9 percent). Among all demanders, 23 percent have been searching for at least one year, 27 percent for at least two years, and 22 percent for at least three years. 20 percent had been searching for five or more years. Survey data indicate that expressed demand is highly concentrated in the highest two (richest) quintiles. Socio-Economic Characteristics of Housing Demanders 94 percent of demanders interviewed are males. 47 percent of demanders are single and 47 percent are married. 66 percent of demanders are individuals other than heads of households. 92 percent of demanders are currently employed with 67 percent reporting monthly incomes of between LE 300 and 900. The majority of all demanders are aged in their twenties and thirties, with 46 percent being in their twenties. Demand for Built Units versus Land Only one demander is looking for serviced land to build upon, whereas all the rest are looking for apartments. Of the demanders for apartments:

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• 95 percent are looking for apartments in a building of less than five floors, with the remainder looking for units in building of five or more floors; and • 66 percent accept the idea of upgrading one's unit over time. Demand by Location and Mobility The reasons for demanders to focus on certain areas are: reasonable prices (64 percent); proximity to relatives and friends (56 percent); proximity to work (43 percent); availability of transportation (39 percent); availability of services and utilities (35 percent); social standing of area (21 percent); availability of health services (16 percent); availability of education services (10 percent); and, quiet neighborhood (5 percent). Only 4 percent of all demanders were looking for units in new urban communities. Demands by Tenure Type 62 percent prefer ownership, while 28 percent of apartment demanders wish to find units for long term lease. 10 percent prefer short term rental. 50 percent of apartment demanders would accept renting the unit at the beginning and perhaps eventually owning it. Financing and Financing Preferences Among all demanders: • 60 percent currently save to acquire a unit or land and the monthly amount being saved averages just under LE 100 per month (median). Only 9 percent are saving LE 200 or more per month; • 8 percent state they themselves have personal property which they could sell to acquire a housing unit or land; • Only 23 percent currently have financial dealings with banks and another 8 percent have had dealings in the past; and • 49 percent would like to obtain a bank loan to finance acquisition of the unit. Of the majority of demanders who do not like taking a loan, the following are the main reasons: fear unable to repay the loan (51 percent); reluctance to be indebted (51 percent); interest increases the installment payments (28 percent); cannot offer guarantees for the loan (26 percent); and, loan interest is sinful (15 percent). Of demanders seeking to purchase units, all 100 percent prefer installment payments over cash. Preferences for and Knowledge of Government-Supported Housing Programs Among all demanders: • 83 percent are looking for government-provided housing, only 3 percent are looking for housing on the private market, and the remaining 14 percent are looking for both types; • Only 31 percent had heard about the NHP. Of those who had heard about it, 29 percent consider that the units offered by the NHP were suitable, 8 percent considered them unsuitable, and the majority (63 percent) did know enough about the program offerings; and

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• Only 30 percent had heard of the mortgage finance system and the mortgage companies. Of these, only 9 percent expressed a liking for mortgages, 17 percent rejected them, and 74 percent did not know enough about the terms.

Of those preferring government-provided housing, the most common reasons were the reasonable price (79 percent) followed by appropriate installment period (47 percent); government programs are more believable (35 percent); and, eligibility for a subsidy (28 percent). Characteristics of Demanded Units For all apartment demanders the preferred median size of the desired dwelling unit is about 80 m2 and the average size is 85 m2. 45 percent of apartment demanders seek finished apartments while 51 percent will take whatever they can find. The following table summarizes key indicators related to expressed housing demand.

Expressed Housing Demand Summary Main Reason for Seeking Housing Unit Marriage (46%) % of Single Demanders 47% % of Demanders Seeking Housing for 1 Year or Less 23% % of Demanders Seeking Housing for 2 Years 27% % of Demanders Seeking Housing for 5 Years or More 20%

% of Demanders Employed 92% Demanders between the Age of 20-30 46%

Demand for Apartments versus Serviced Land 99%, 1% Demand for Units in New Communities 4% Demand for Purchased Units, Short-term Rental, Long-term Rental 62%, 10%, 28%

% of Demanders who Currently Save for Housing 60% % of Demanders with Disposable Assets 8% % of Demanders with Access to Financial Institutions 23% % of Demanders who are Reluctant to Secure a Loan for Housing Purchase 51% % of Demanders who Prefer Installment Payments versus Cash Payment 100%, 0%

Demanders Looking for Housing on Private Market 3% Demanders Looking for Housing through Government 83% Demanders Looking for Both Types (Gov and Private) 14% % of Demanders who Have Heard of the NHP 31% % of Demanders who are Interested in Mortgage Finance 9%

Median Size of Desired Apartment Units 80 m2

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III. OCCUPIED HOUSING STOCK Housing Unit Types, Sizes, Number of Rooms Of surveyed households, 84 percent live in an apartment of a walk-up building. Of the surveyed housing stock: • 50 percent have gross areas ranging from 65 to less than 90 m2; • 14 percent have areas of 40 to less than 65 m2; • 24 percent have areas of 90 to less than 120 m2; and • The average number of rooms is almost the same in all quintiles (ranging from 3 to 4); while the average number of bedrooms is around 2 in all quintiles. Housing Unit Amenities 97 percent of surveyed households have a private kitchen in their housing. 99 percent of surveyed households have access to private bathing and toilet facilities. 97 percent of surveyed households have access to running water. 90 percent of surveyed housing units have access to sewage lines. Housing Unit Improvements 90 percent of surveyed households have made modifications in their housing units at some point since first occupying them. Of surveyed households: • 72 percent indicated they had no need to make modifications; and • Remaining 28 percent identified the required renovations or improvements as mostly repairing or finishing, and improving utilities and services. Expressed Housing Unit Satisfaction 91 percent of surveyed households are satisfied with their current housing. The most commonly identified sources of dissatisfaction with housing are insufficient living area, internal utility problems and wall cracks. The most frequently identified problems with neighborhoods are inappropriateness of neighborhood standards, insecurity, and noise. Housing Tenure Status and Security Two main tenure types dominate the housing stock in urban Canal Governorates: ownership (36 percent) and purchase from government (33 percent). Rental according to the New Law is still limited (10 percent) as are gift and in kind privileges (8 percent). Ownership is, except the first quintile, evenly represented over all income quintiles. Rental under the Old Law is evenly represented over all income quintiles except the first quintile. Rental under the New Law appears more suitable for the third and fourth quintiles, with no clear trend through the quintiles.

34 percent of owners indicate that they have a final contract of their current housing registered at the Real Estate Registrar. 4 percent say they have sale contracts ruled valid and binding in court then registered at Real Estate Registrar. The following table summarizes key indicators related to occupied housing stock.

Occupied Housing Stock Summary % of Households Living in Apartments in Walk-up Building 84% Median Gross Housing Size 80 m2 Median Net Housing Size 73 m2 % of Households with Private Bathroom 99% % of Household who Renovated their Units in 2007 2% % of Households Needing Home Repairs 28% % of Households who are Satisfied to Some Extent with their Housing 91%

% of Old Law Rent Among Other Tenure Types 12% % of Ownership Among Other Tenure Types 36%

IV. BUILDING AND NEIGHBORHOOD CHARACTERISTICS Building Characteristics The dominant type of building is the small, multi-story apartment block. 85 percent of all housing units surveyed are apartments in buildings and only 13 percent are either villas or rural houses. The remainder is single rooms in buildings or apartments. Of the 949 buildings surveyed: • 92 percent are rated "adequate" regarding their general condition while 7 percent are deemed "partially adequate," and 1 percent "inadequate;" and • The average age of buildings is 23 years. They average approximately 10 units, 4 floors and a total surface area of 178 m2. Neighborhood Characteristics Survey data indicate that: • The condition of residential streets in urban Canal Governorates is good, with over than half of streets being paved and in good condition; • 30 percent of streets are unpaved; and

• Over 7 percent of streets have had some paving in the past but are not in good condition. Characteristics of Unoccupied Units in Surveyed Buildings 85 vacant units were enumerated in the 949 building surveyed. The following characteristics only apply to enumerated vacant units. They are not related to the universe of vacant units:

• 47 percent are owned, 4 percent are held under Old Rent contracts, only 2 percent are held under New Rent Contracts, and surprisingly 47 percent were classified as gifts;

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• 93 percent are not being offered for sale or rent, i.e. they are being withheld from the market even though they are empty; • 65 percent of the vacant units being withheld from the market are "empty and finished;" • 30 percent are either not finished or half finished; and

• The average number of years units have been closed is 5 years. The following table summarizes key indicators related to building and neighborhood characteristics.

Building and Neighborhood Characteristics Summary % of Buildings Deemed Adequate 92% Average Age of Building 23 years Average Number of Housing Units per Building 10 Average Number of Floors per Building 5 % of Streets Paved 57%

% of Vacant Units on Market 7% Average Number of Years Vacant Unit is Closed 5 years % of Vacant Units Owned versus Under Old Rent 47%, 4%

V. HOUSEHOLD CHARACTERISTICS Generalities The average household size is 4 persons. Survey data regarding youth and marital status point to a potentially strong future demand for housing since: • 67 percent of household members are under age 35; and • 30 percent of individuals of marriageable age have never been married. Household Finances, Expenditure and Savings Survey data yield estimates of LE 3,461 for average per capita annual income and LE 14,494 for average annual household income. Urban Canal Governorates is slightly poorer than Urban Egypt. 79 percent of household income earned in urban Canal Governorates comes from salaries and wages while 16 percent comes from non-agricultural businesses. Incomes from agricultural activities represent about 3 percent and remittances account for 2 percent. Average annual per capita spending for surveyed households is estimated at LE 3,146 and an average annual household expenditure is estimated at LE 13,289. And, surveyed households save about 8 percent of their income. 48 percent of the surveyed household budgets are spent on food. Housing expenses are next at 12 percent, followed by healthcare at 7 percent, transportation at 6 percent and education at 6 percent.

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Housing Expenses Survey data show that the average expenditure per household is LE 1,513. They also show that 83 percent of households spend less than LE 2,000 on housing annually and that 16 percent spend in the range of LE 2,000 to 5,000. Except for the “less than LE 2,000” category, the data also show that the housing expenditures of households in urban Canal Governorates are slightly less than those of households in the whole of Urban Egypt. Possession of Assets and Financial Dealings Survey data reveal that 97 percent of households own a color television while 75 percent possess a satellite dish receiver and 62 percent have cell phones. 13 percent of households have members who have financial dealings with banks, lenders, installment sellers, or other financial institutions. The following table summarizes key indicators related to household characteristics.

Summary of Household Characteristics Average Household Size 4 persons % of Household Members between the Age of 15- 35 years 37% % of Household Members Currently Unemployed 5%

Average Per Capita Annual Income LE 3,431 Average Annual Household Income LE 14,494

Average Annual Per Capita Expenditure LE 3,146 Average Annual Household Expenditure LE 13,289

% of Housing Expenses of Total Household Budget 12% Average Annual Expenditure on Housing Per Household LE 1,513

% of Households with Color TVs 97% % of Households with Private Cars 11%

% of Households with Current Financial Dealings 13%

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CHAPTER 1: INTRODUCTION

1.1 STRUCTURE OF THE STUDY This report on housing in urban areas of the Canal Zone is one of a series of housing studies based on a representative household sample survey carried out in 2008 (see below). Reports in this series cover other geographical areas (including urban Greater Cairo, urban Delta, Alexandria Governorate, urban Canal governorates, and peri-urban Greater Cairo). In addition, a separate report in this series will cover all of urban Egypt, including comparisons among geographic areas. Chapter Two of this report looks at the characteristics of the buildings and neighborhoods in which surveyed households in urban Canal governorates live. Chapter Three reports on the socio-economic characteristics of the households surveyed, including expenditures and income and financial behavior. Chapter Four looks at the characteristics of the housing units occupied by surveyed households, including tenure status and expressed satisfaction. Chapter Five investigates housing exchange dynamics and market behavior, including both rental and purchase sub-markets. Finally, Chapter Six looks at those currently seeking housing and their expressed demand for types of units.

1.2 THE 2008 HOUSING DEMAND SURVEY As stated above, this report uses 2008 survey data to analyze housing characteristics in urban areas of the Canal Zone. The methodology used in this representative household sample survey which covered all of urban Egypt and which had a total sample size of 23,460 households is fully described in a separate volume "Egypt Housing Survey Methodology". It should be noted that the survey looked at basic characteristics of the buildings in which surveyed households lived, but did not sample vacant buildings and/or unfinished buildings/projects and thus cannot be considered to represent the universe of buildings. It should also be noted that per capita household income quintiles were constructed for the whole of the sample (23,460 households), and that all data in this report which refers to income quintiles relates to this national urban income distribution. The sample household survey for urban Canal governorates covered the universe of all households in urban Canal governorates. In other words, the universe of households covered relates to the urban areas of Ismailia Governorate and the whole of the Governorates of Port Said and Suez (which are considered urban in their entirety by CAPMAS). Field work was carried out in May and June 2008. The sampling methodology and frame was based on CAPMAS master sample lists which had been adjusted for results of the 2006 Census. A total of 65 PSUs were used, and at 20 households per PSU the total sample size was 1,300 households (see Annex A that lists the urban Canal governorates PSUs). The total number of household members covered by the survey was 5,492 persons. Also covered in the survey were basic characteristics of the buildings in which surveyed households lived. A total of 949 buildings were covered, comprising 9,682 housing units. Studied in the Survey were those household members who were actively seeking housing units on the market at the time of the Survey. These "demanders" totaled 77 individuals (found in 75 households).

This report presents only the most direct and useful results of the Survey for urban Canal governorates due to time and resource constraints. The data sets generated by the Survey are extensive and rich, and the entire raw data base has been transmitted to MHUUD/MOI to ensure that other researchers may have access to this unique data set. Interested researchers should contact MHUUD/MOI to gain access to the 2008 housing demand data set.

1.3 BACKGROUND ON URBAN CANAL GOVERNORATES DEMOGRAPHICS AND ADMINISTRATIVE BOUNDARIES The Canal governorates are Ismailia, Port Said, and Suez. Ismailia includes rural as well as urban areas, but both Port Said and Suez are considered all urban. In 2006 the Census recorded a total population of 2.04 million inhabitants for the three Canal governorates, of which 1.51 million or 74.0 percent are classified as urban. Urban areas3 of the Canal governorates are mainly the three large cities of Ismailia, Port Said, and Suez, with populations ranging between 250,000 to 500,000 inhabitants. There are also several small towns which are part of Ismailia with populations in the 15,000 to 40,000 range. The three large cities in the Canal Zone all are located on the west bank of the Suez Canal. Port Said has in addition a suburb called Port Fuad on the east bank. Only Ismailia has a true agricultural and rural hinterland around it which also extends east to Sharqia Governorate. A number of small towns are located in these rural areas. All three Canal governorates have boundaries which extend 15 to 25 kilometers into the Sinai desert. In all three governorates there are schemes to reclaim desert land for agriculture and village settlements on both sides of the Suez Canal. The three large cities are all surrounded mostly by State-owned desert or marsh land. Thus land is available in large quantities for government housing schemes, and this particular feature of the Canal cities is reflected in the survey results (See in particular Chapter 5). As can be seen from Table B.1 in annex B, the urban population for the Canal governorates was 1.25 million in 1996 and increased to 1.51 million by 2006. This represents an average annual increase of 1.91 percent. By applying this rate of increase for 1.5 years (the time gap between the 2006 Census and the 2008 EHS field work) it is possible to estimate the population universe of the 2008 Survey of urban Canal governorates as 1.56 million. With an average household size of 4.2 persons, this yields a total universe of 370,950 households which were covered in this Survey.

3 "Urban areas" are those defined by CAPMAS in the Census of 2006 as urban.

CHAPTER 2: BUILDING AND NEIGHBORHOOD CHARACTERISTICS

2.1 INTRODUCTION The 2008 housing demand survey questionnaire had a subset of questions about the buildings in which sampled households in urban Canal governorates resided. This resulted in information on 949 buildings. In addition, households were asked certain questions about their neighborhoods. This generated a number of interesting results about residential buildings and their neighborhoods which are presented in this chapter.

2.2 BUILDING CHARACTERISTICS By far the dominant type of building is the multi-story apartment block. For example, most housing units surveyed were single apartments in buildings (84.1 percent) or more than one apartment in a building (0.6 percent). Only 4.2 percent were villas and 8.4 percent were classified as "rural houses".4 The remainder of housing units (2.2 percent) was single rooms in buildings or apartments. The median surface area (footprint) of the buildings surveyed was 150 m2, and 35.1 percent of buildings had surface areas of 100 m2 or less. Only 12.1 percent of buildings had surface areas greater than 300 m2. Of the 949 buildings surveyed, general characteristics are summarized as follows: • Average age of building: 23 years • Median year of building construction: 1988 • Average number of housing units in a building: 10.2 units • Median number of housing units in a building: 6.0 units • Average number of floors in building (including ground floor): 4.0 floors • Median number of floors in building (including ground floor): 4.0 floors • Average total surface area of building (building footprint): 178 m2 • Median total surface area of building (building footprint): 150 m2 • Overall condition of building: 92.0 percent "adequate", 6.6 percent "partially adequate", and only 1.4 percent deemed "inadequate" • Average width of street fronting building entrance: 10.7 meters • Median width of street fronting building entrance: 10.0 meters

The following Tables 2.1 through 2.3 give more details about the buildings sampled in the Survey.

4 A rural house is a building, usually of one or two stories, that includes one room or more and is typically built of mud or adobe brick. Source: Definitions Used in Census 2006, Information and Decision Support Center, April 2007.

Table 2.1: Year of Building Construction Years Count Percent Cumulative Percent Before 1955 41 4.3 4.3 1955–1964 52 5.5 9.8 1965–1974 89 9.4 19.2 1975–1984 179 18.9 38.0 1985–1994 355 37.4 75.4 1995–2004 212 22.3 97.8 2005+ 21 2.2 100% Total 949 100%

Table 2.2: Number of Units in Building Number of Units Count Percent Cumulative Percent 1 156 16.4 16.4 2 103 10.9 27.3 3 64 6.7 34 4 76 8.0 42 5 40 4.2 46.2 6 49 5.2 51.4 7 6 0.6 52 8 45 4.7 56.7 9 7 0.8 57.5 10 80 8.4 65.9 11–15 50 5.3 71.2 16–20 144 15.2 86.4 21–30 101 10.6 97 31+ 28 3.0 100% Total 949 100%

Table 2.3: Distribution of Surveyed Buildings by Number of Floors Building Number of Floors Count Percent 1 165 17.4 2 113 11.9 3 105 11.1 4 119 12.6 5 258 27.3 6 109 11.5 7 56 5.9 8 2 0.2 9 1 0.1 10 6 0.6 11 7 0.7 12 and more 4 0.4 Total 946 100%

As indicated earlier, the average number of housing units per building is 10.2. Figures in Table 2.4 indicate that the number of housing units in buildings rises significantly with higher income quintiles, starting from 7.8 units in the lowest quintile reaching an average5 of 16.1 units for the highest income quintile. This means that richer households tend to live in larger buildings than their poorer counterparts.

Table 2.4: Mean and Median Number of Units in a Building by Household Income Quintiles6 Item 1st Quintile 2nd Quintile 3rd Quintile 4th Quintile 5th Quintile Mean no. of units 7.8 11.1 13.6 14.3 16.1 Median no. of units 3 8 11 12 12

There is a similar relationship between household income quintiles and the width of the street the building fronts, although this relationship is not so dramatic, as shown in Table 2.5.

Table 2.5: Mean and Median Street Width by Income Quintiles Item 1st Quintile 2nd Quintile 3rd Quintile 4th Quintile 5th Quintile Mean width of street 9.9 10.5 11.7 11.5 12.9 Median width of street 8 10 10 10 12

The street widths that buildings are fronting of all buildings surveyed are shown in Table 2.6. As can be seen, 23.6 percent of buildings front very narrow lanes of 6 meters or less, and almost half front on lanes of 8 meters or less. However, 36.9 percent of buildings front on streets which are wider than 10 meters. Table 2.6: Distribution of Surveyed Buildings by Width of Street They Front Street Width (m) Count Percent Cumulative Percent –4 36 3.8 3.8 –6 188 19.8 23.6 –8 214 22.6 46.2 –10 161 17.0 63.2 –15 254 26.8 90 –20 37 3.9 93.9 –30 41 4.3 98.2 >30 181 1.8 100% Total 949 100%

Using the Survey results, it was possible to calculate the ratio of the height of the building to the width of the street it is on.7 Buildings are distributed by this ratio in Table 2.7.

5 The terms average and mean are used interchangeably throughout the report. 6 Classification of households in Urban Egypt into quintiles is, in this report, based on the per capita annual income not the whole household annual income. 7 In this calculation it is assumed that each floor in a building is three meters height. This tends to slightly underestimate a building's height since it is common for ground floors to be four to five meters height.

Table 2.7: Distribution of Sampled Buildings by Ratio of Building Height to Street Width Street to Height Ratio Count Percent < 0.5 109 11.5 < 1 191 20.1 < 1.5 280 29.5 < 2 225 23.7 < 2.5 76 8.0 < 3 35 3.7 < 4 13 1.4 < 5 0 0.0 5+ 1 0.1 Missing 19 2.0 Total 949 100%

In the Egyptian Building Code, the maximum allowed ratio of building height to street width is 1.5. In the sample, 61.1 percent of buildings had ratios equal to or less than 1.5. This means that 38.9 percent of buildings exceeded the ratio of 1.5 allowed in the Building Code. A question was asked as to who originally owned (produced) the building. This revealed that: overall, 51.6 percent of buildings were produced by an individual or a group of individuals; 12.5 percent were produced by informal developers or contractors "ahali"; 34.0 percent were produced by government or the public sector; and, only 1.1 percent were produced by private sector companies. While the dominant form of production was individuals, the incidence of government production (at over one third of the total) is remarkably high when compared to other urban areas of Egypt. In contrast, the "corporate" private sector is practically non-existent as a producer in the Canal cities.

2.3 NEIGHBORHOOD CHARACTERISTICS Households surveyed were asked if they considered their immediate neighborhood to be formal or informal ("aashwa'i). Only 23.5 percent of households considered their neighborhood to be informal, and the rest considered their neighborhood to be formal. The portion of households who said they lived in informal areas varied by the income of the household, as shown in Table 2.8. For example, 50.5 percent of the poorest respondents (first household quintile) said they lived in informal areas, compared to only 11.4 percent of the richest (fifth household quintile). As can be seen from Table 2.8, the data show that the perception of “formality” of the neighborhood increases with rising household income.

Table 2.8: Formality of District by Income Quintiles Item 1st Quintile 2nd Quintile 3rd Quintile 4th Quintile 5th Quintile Total Informal (N) 107 80 45 43 30 305 (%) 50.5 32.0 16.2 14.5 11.4 23.5 Formal (N) 105 170 233 254 233 995 (%) 49.5 68.0 83.8 85.5 88.6 76.5 Total (N) 212 250 278 297 263 1,300 (%) 16.3 19.2 21.4 22.8 20.2 100%

The Survey asked about the condition of the street on which the building was located, and the results were as follows: On paved street in good condition 56.5% On paved street not in good condition 0.8% On street with traces of former paving 7.3% On un-paved street 35.4% 100%

The condition of residential streets in Urban Canal governorates is good, with more than half being paved in good condition and with about a third unpaved.

2.4 CHARACTERISTICS OF UNOCCUPIED UNITS IN BUILDINGS In the Survey, questions were asked about all the units in surveyed buildings, including closed/vacant units. This generated information about these unoccupied units, as shown below. It is important to understand that this information does not relate to the universe of all urban dwelling units in Canal governorates nor to the universe of vacant units, but only relates to vacant units in buildings where surveyed households live. No completely un- inhabited buildings were captured in the Survey. Even so, the results which are presented here allow a better picture of the characteristics of these vacant units and the reasons for their vacancy. What is the definition of a vacant unit? In the questionnaire, the respondent was asked to enumerate all units in the building which were not used, in other words no one is occupying them presently. Overall, there were 85 vacant units which represent only 0.9 percent of the total units (N=9,682) enumerated in all the buildings surveyed. As mentioned above, this does not relate to the total universe of closed/vacant units, which would represent a far higher portion of the total dwelling unit stock. Table 2.9 breaks down the enumerated vacant units by tenure status and condition. Of the total vacant units enumerated (N=85), 47 percent were owned, 3.5 percent were held under Old Rent contracts, and only 2.3 percent were held under New Rent Contracts.8 Surprisingly, a high portion, 47 percent, were classified as "gifts". No furnished rental units were unoccupied.

As can be seen, the large majority of vacant units, 93 percent, are not being offered for sale or rent, i.e. they are being withheld from the market even though they are empty. Only 7 percent of the vacant units were "on the market", i.e. offered either for sale or rent.

8 The New Law refers to Law no. 4 of 1996 that has decontrolled rents and allowed landlords to set market prices for new or vacant units.

Table 2.9: Surveyed Unoccupied Units by Tenure and Condition Unoccupied Units Condition Ownership Old Rent New Rent Gift Total Residential ready to be lived in 0 0 0 0 0 Unoccupied Commercial ready to be used 3 0 2 0 5 off-market Empty and finished 8 3 0 40 51

Empty and 1/2 finished 6 0 0 0 6

Empty and not-finished 17 0 0 0 17

Total 34 3 2 40 79 Unoccupied Empty and finished 2 0 0 0 2 on-market Empty and 1/2 finished 0 0 0 0 0 Empty and not-finished 4 0 0 0 4 Total 6 0 0 0 6 Total unoccupied 40 3 2 40 85

Which units, according to tenure status, registered the highest rate of vacancy? By comparing unoccupied units with the total units in each tenure category, the following vacancy rates were obtained: Owned Units 0.5 percent were unoccupied Old Rent Units 0.4 percent were unoccupied New Rent Units 0.4 percent were unoccupied Gift Units 6.9 percent were unoccupied

The average number of years units have been closed is 4.5 years, and the median is 5.0 years.

CHAPTER 3: HOUSEHOLD CHARACTERISTICS

3.1 INTRODUCTION This chapter analyzes the socioeconomic characteristics of urban households in Canal governorates and studies the relationship between income and socioeconomic variables such as gender, age, educational status and employment of the household head, household total annual expenditures and household expenditures on housing.

3.2 HOUSEHOLD CHARACTERISTICS 3.2.1 AGE AND GENDER COMPOSITION In Canal governorates, the sampled urban households included large numbers of children and youth. The proportion of household members up to the age of 15 years was 30.6 percent, while 36.5 percent was between 15 and 35 years of age. This distribution means that in the coming years, many urban citizens of Canal governorates will be reaching the stage of life where they wish to marry, start their own families, and thus create new households — creating a corresponding need for additional housing. Among the households sampled, the gender breakdown was 50.4 percent male, 49.6 percent female. The average age of household head (i.e., the person who supports the rest of the household) is 48.6 years. Most households (85 percent) in urban areas of Canal governorates are headed by males, while 15 percent are headed by females. Table 3.1 shows the head-of-household (HHH) gender and age by household income quintiles. Clearly, the percentage of households supported by females is higher in richer quintiles. The age of household head increases with the increase of income.

Table 3.1: Head-of-Household Gender and Age by Income Quintiles 1st 2nd 3rd 4th 5th Total Quintile Quintile Quintile Quintile Quintile HHH Gender Male (%) 91.5 87.2 84.5 85.5 77.6 85.0 Female (%) 8.5 12.8 15.5 14.5 22.4 15.0 HHH Age Mean 43.2 44.9 48.6 50.3 54.7 48.6 Median 41.5 45.0 48.0 50.0 56.0 48.0 Note: Income quintiles represent the national urban per capita household income distribution.

3.2.2 MARITAL STATUS The great majority of heads of household (80.7 percent) are married. For individuals of marriageable age (defined as 16 or older for females, 18 or older for males), three-fifths (60.5 percent) are married, while those who have never been married are about 31 percent of this population (see Table 3.2 below). Among females of marriageable age, 26.9 percent have never been married; the figure for males is 30.8 percent. These last figures are suggestive of potential demand for housing, since many of these individuals can be expected to marry and start new households in the near future.

Table 3.2: Household Members of Marriageable Age by Marital Status and Gender Females Males Total Marital Status Count Percent Count Percent Count Percent Never been married 511 26.9 626 34.8 1,137 30.8 Married 1,122 59.2 1,114 62.0 2,236 60.5 Widowed 221 11.6 48 2.7 269 7.3 Divorced 41 2.2 6 0.3 47 1.3 Signed Contract 2 0.1 3 0.2 5 0.1 Total 1,897 100% 1,797 100% 3,694 100%

3.2.3 HOUSEHOLD SIZE AND COMPOSITION Survey results indicate that 32.5 percent of urban households in Canal governorates consist of one to three members, 64 percent of four to seven members, and 3.5 percent of eight members or more. The average household size is 4.2 persons. Households fall mainly into three categories: one-person households (4.8 percent of the sample), nuclear households (the vast majority, at 83.5 percent), and extended households (11.5 percent). The sample includes only one composite household.9

3.2.4 EDUCATION Survey data show that 18.9 percent of household members aged 10 or older are illiterate and the adult literacy rate is 81.1 percent (see Table 3.3).

9 A nuclear household is defined as a household consisting of a single family nucleus. It may be classified into: (i) Married couples with or without children; or (ii) father or mother with children. An extended household consists of any of the following: (i) A single family nucleus and other related persons; (ii) Two or more family nuclei related to each other without any other persons; (iii) Two or more family nuclei related to each other plus other persons related to at least one of the nuclei; or (iv) Two or more persons related to each other, none of whom constitute a family nucleus. A composite household is defined as a household consisting of any of the following: (i) A single family nucleus plus other persons, some of whom are related to the nucleus and some of whom are not; (ii) A single family nucleus plus other persons, none of whom is related to the nucleus (Source: Principles and Recommendations for Population and Housing Censuses, Statistics Division, Department of Economic and Social Affairs, United Nations, 1997.)

Table 3.3: Level of Education for Household Members over Age 10

Level of Education Count Percent

Illiterate 845 18.9 Literate (no degree) 544 12.2 Below average education (elementary, preparatory only) 858 19.2 Average education (high school) 1,445 32.3 Above average but below university degree 190 4.2 University degree 575 12.8 Post-graduate degree (Masters, Ph.D.) 20 0.4

Total 4,477 100%

As for household heads, a significant number (28.4 percent) are illiterate. 7.2 percent of household heads can read and write, but have not completed any level of schooling. 30.5 percent of heads of households have average levels of education, and 16.6 percent have university degrees (see Table 3.4). It should be noted that education is one component of the cultural background of individuals that not only affects housing needs and choices but also influences housing satisfaction. Table 3.4 shows the head-of-household level of education by household income quintiles. The data show that illiteracy decreases with the increase in income, while the percentage of university graduate and post-graduate heads of household rises with the increase in income. Education of household head is, therefore, positively correlated with income.

Table 3.4: Head-of-Household Level of Education by Household Income Quintiles 1st 2nd 3rd 4th 5th Total HHH Level of Education Quintile Quintile Quintile Quintile Quintile (%) (%) (%) (%) (%) (%)

Illiterate 43.4 29.6 27.0 25.6 19.8 28.4 Literate (no degree) 10.4 6.0 7.9 6.1 6.5 7.2 Below average education 14.2 16.4 9.4 13.8 9.1 12.5 (elementary, preparatory only) Average education 26.9 34.0 38.5 29.6 22.4 30.5 Above average but below 2.8 5.6 2.5 5.7 6.8 4.8 university degree University degree 1.9 8.0 14.4 18.2 33.5 15.8 Post-graduate degree (Masters, 0.5 0.4 0.4 1.0 1.9 0.8 Ph.D.)

3.2.5 WORK STATUS The labor force is defined as including all people that contribute with physical or mental efforts to the production of goods or services (in other words, those who are employed), as well as those who are capable of working and are searching for a job but have not found one yet (the unemployed). Survey data show that 31.4 percent of the sample population of urban Canal governorates is in the labor force. Another 53.3 percent of the sample population falls within the age bracket of 15 to 64 years, but is classified as outside the labor force because these individuals are not currently employed or are not actively seeking employment as well (full-time students, housewives, etc). The remaining balance (15.3 percent) is outside all manpower. The participation rate is calculated to be 37.1 percent.10 Within the urban labor force of Canal Zone, 95 percent are employed. The 5 percent unemployment rate is lower than the 9.3 percent unemployment rate found in urban Egypt in 2006.11

A high percentage of heads of household (73.2 percent) are in the labor force. The vast majority of household heads in the labor force, 98.1 percent, are employed.

Table 3.5 shows the head-of-household employment status by household income quintiles. We can observe that the lower income quintiles have higher percentage of employed heads of household.

Table 3.5: Head-of-Household Employment Status by Household Income Quintiles st nd rd th th 1 2 3 4 5 Total HHH Employment Status Quintile Quintile Quintile Quintile Quintile (%) (%) (%) (%) (%) (%)

Employed 82.1 77.2 74.8 68.0 59.3 71.8 Unemployed but previously 0.0 0.8 0.0 0.3 0.4 0.3 employed Working housewife 0.9 1.2 0.7 1.3 1.1 1.1 Outside labor force 9.0 15.6 14.4 16.8 16.3 14.7 Outside all manpower 8.0 5.2 10.1 13.5 22.8 12.2

Of all household members who are employed, the majority (91.3 percent) have permanent jobs, while the rest (8.7 percent) have intermittent, temporary or seasonal jobs. As for employed household heads, 97.5 percent of this group has permanent jobs, and the remaining work intermittently or temporarily. Laborers (production, operation, transportation, site laborers and porters) comprise the largest group (27.9 percent) of employed or previously employed household members. Next are technical and scientific occupations at 24.0 percent. Service occupations represent 11.1 percent. Clerical workers are 10.8 percent and managers, administrators and business

10 Participation rate is the ratio between the labor force and the overall size of the national population of the same age range. 11 Egypt Human Development Report, Egypt’s Social Contract: The Role of Civil Society, United Nations Development Programme (UNDP) and National Planning Institute, Cairo, 2008.

owners are 10 percent. Farm workers, fishermen, or hunters comprise 8.3 percent while salesmen are 8 percent. The employment patterns of heads of households are close to those described above for the labor force as a whole. 28.1 percent of household heads work as laborers, and 22.7 percent work in technical and scientific occupations. Managers, administrators, and business owners comprise 13.8 percent while 11.3 percent work in the sector of service provisions. Clerical workers are 9.4 percent. Farm workers, fishermen, or hunters are 8.7 percent while salesmen are 6 percent. Survey data indicate that the large majority of employed household members (97.0 percent) work in the same city or markaz, while 2.4 percent work in another city or markaz.

3.3 HOUSEHOLD FINANCES 3.3.1 INCOME CHARACTERISTICS The aggregate income of all households in the sample was LE 18.8 million annually. This translates into an average per capita annual income of LE 3,431 and an average annual household income of LE 14,494. The households in the Survey were classified according to the annual income brackets defined by CAPMAS for the purpose of comparing the results with the figures on urban Egypt in the CAPMAS 2004-05 HIECS. Table 3.6 shows this comparison. Urban Canal governorates are slightly poorer than urban Egypt as the percentages of households in all household income brackets from “less than LE 10,000” to “LE 100,000 or more” are, except for two income brackets, lower for the urban Canal governorates than those of urban Egypt.

Table 3.6: Surveyed Households by Annual Income

Urban Canal Governorates (%) – 12 Household Income Brackets (LE) Urban Egypt (%) – 2004/05 2008

Less than 2,000 0.1 0.2 2,000 – 0 0.7 3,000 – 1.2 1.3 4,000 – 3.3 2.3 5,000 – 2.5 3.7 6,000 – 4.5 4.6 7,000 – 7.9 6.2 8,000 – 5.7 7.1 9,000 – 10.4 6.9 10,000 – 8.2 10.6 11,500 – 12.6 9.1 13,000 – 9.9 10.5 15,000 – 6.7 7.7 17,000 – 8.5 8.5 20,000 – 9.7 7.7 25,000 – 2.6 4.2 30,000 – 5.5 6.1 50,000 – 0.5 1.7 75,000 – 0.2 0.5 100,000 or more 0.1 0.4

Total 100% 100%

Table 3.7 shows the distribution of households in urban Canal governorates by national urban per capita household income quintiles.

Table 3.7: Annual Household Income by Quintile (LE)

HH Annual st nd rd th th 1 Quintile 2 Quintile 3 Quintile 4 Quintile 5 Quintile Total Income

Mean 7,943 10,687 13,363 15,510 23,444 14,494 Median 7,200 10,800 12,960 14,800 21,600 12,000 Note: Income quintiles represent the national urban per capita household income distribution.

Table 3.8 shows the sources of income and their relative importance. About 78.6 percent of income earned in urban areas of Canal governorates comes from salaries and wages. The next largest fraction (16.1 percent) comes from non-agricultural businesses. Agricultural activities comprised 2.7 percent while remittances were 1.8 percent.

12 Household Income, Expenditures, and Consumption Survey 2004/05, CAPMAS

Table 3.8: Total Surveyed Annual Household Income by Income Source Sources of Income LE (Million) Percent

Salaries and wages 14.8 78.6 Agricultural activities 0.5 2.7 Non agricultural businesses 3.0 16.1 Financial property 0.1 0.3 Non financial property 0.1 0.5 Remittances 0.3 1.8

Total 18.8 100%

3.3.2 EXPENDITURE AND SAVINGS Survey data indicate that the total annual expenditure of all surveyed households amounts to LE 17.3 million, with an average annual per capita spending of LE 3,146 and an average annual household expenditure of LE 13,289. It is noted that the individual and household income averages are higher than expenditures, indicating an overall savings capacity of surveyed households of 8.3 percent of their total income. Table 3.9 shows the distribution of annual household expenditure by income quintiles. As expected, expenditures increase with the increase of income.

Table 3.9: Annual Household Expenditure by Income Quintiles (LE)

HH Annual st nd rd th th 1 Quintile 2 Quintile 3 Quintile 4 Quintile 5 Quintile Total Expenditure

Mean 7,985 10,328 12,873 14,483 19,472 13,289 Median 7,568 10,110 12,246 13,600 16,980 11,302

Table 3.10 shows that on average 47.8 percent of household budgets in the surveyed households are spent on food. Housing expenses are next at 12.1 percent, followed by healthcare (6.9 percent), transportation (6.3 percent) and education (5.7 percent). Survey data also show that as household income increases: household expenditures on food decrease in relative terms; and household expenditures on transportation increase in relative terms. There are no clear trends for household expenditures on housing, healthcare and education through the five quintiles.

Table 3.10: Average Percentage of Different Expenditure Categories to Total Household Expenditures by Income Quintiles 1st Quintile 2nd Quintile 3rd Quintile 4th Quintile 5th Quintile Total Category (%) (%) (%) (%) (%) (%)

Food 50.5 49.3 47.0 46.4 46.3 47.8 Alcohol, smoking and caffeine 1.8 1.5 1.8 1.2 1.0 1.4 Clothes 4.2 4.4 4.4 4.0 4.0 4.2 Housing and housing needs 13.3 12.5 13.2 12.2 9.6 12.1 Furniture, appliances and housing services 4.4 4.2 4.0 3.8 3.8 4.0 Health care 6.4 6.1 5.7 7.2 9.3 6.9 Transportation 5.7 6.0 6.3 6.4 7.0 6.3 Telecommunications 2.8 4.2 5.1 4.8 5.9 4.6 Culture and recreation 0.3 0.7 0.9 1.0 1.0 0.8 Education 5.8 5.6 5.9 6.1 4.9 5.7 Restaurants and hotels 1.0 1.9 2.4 3.3 3.3 2.5 Commodities and other services 3.8 3.7 3.2 3.6 3.8 3.6

Total 100% 100% 100% 100% 100% 100%

3.3.3 HOUSING EXPENSES Total housing expenditures of all surveyed households equaled LE 2.0 million, indicating an average annual expenditure per household of LE 1,513. Table 3.11 shows that 82.5 percent of households spend less than LE 2,000 on housing annually and that 15.9 percent spend in the range of LE 2,000 to 5,000. Except for the “less than LE 2,000” category and the “LE 2,000 to 5,000” category, the data also show that the housing expenditures of urban households in Canal governorates are slightly less than those of households in the whole of urban Egypt.

Table 3.11: Housing Expenditures

Urban Canal governorates (%) – 13 Housing Expenditure (LE) Urban Egypt (%) – 2004/05 2008

Less than LE 2,000 82.5 80.4 2,000 – 15.9 15.6 5,000 – 1.4 3.6 15,000 or more 0.2 0.4

Total 100% 100%

Over two-thirds (69.2 percent) of all households in the survey have household members (other than a wife and unmarried children) who contribute to housing expenses.

13 Household Income, Expenditures, and Consumption Survey 2004/05, CAPMAS

3.3.4 POSSESSION OF ASSETS Table 3.12 shows asset ownership by surveyed households. A color television is the most common possession, owned by about 97.1 percent of households. Next is a satellite dish receiver (74.7 percent), followed by cell phones (61.7 percent). These statistics show how widespread the tools of mass media and telecommunications are in urban areas of Canal governorates.

Table 3.12: Assets Owned by Surveyed Households Item No. of Households Percent

Private cars 143 11.0 Vehicle for hire (taxi, microbus...) 16 1.2 Truck 4 0.3 Motorcycle/Vespa 8 0.6 Cell phone 802 61.7 Internet 51 3.9 Deep freezer 112 8.6 Microwave/electric oven 25 1.9 Automatic washer 418 32.2 Dishwasher 3 0.2 Vacuum cleaner 257 19.8 Air conditioner 59 4.5 Color television 1,262 97.1 Plasma/LCD TV 6 0.5 Satellite receiver/connection 971 74.7 Personal computer 219 16.8 Water filter 15 1.2 Agricultural land 46 3.5 Empty plot of land 5 0.4 Vacation house 1 0.1 Second home 14 1.1 Housing as form of investment or savings 9 0.7

3.3.5 FINANCIAL DEALINGS Only 13.4 percent of all households in the survey have household members who hold current financial dealings with banks, lenders, installment sellers or financial institutions. 5.2 percent of households reported that their members have had financial dealings in the past but not currently. For those who currently have or ever had financial dealings, banks come on top of financial institutions household members have dealings with (92.9 percent). The main types of financial dealings for this group include bank savings (79.3 percent), post offices saving (10.8 percent), loans other than car/mortgage finance (7.9 percent) and installment purchases without bank loans (2.5 percent).

CHAPTER 4: CHARACTERISTICS OF OCCUPIED HOUSING STOCK

4.1 INTRODUCTION This chapter presents the Study’s findings on housing conditions in urban areas of Canal Governorates as part of the representative sample of households in urban Egypt. The chapter profiles the characteristics of the existing housing stock and provides responses to essential housing questions. Chapter 5 will address the operation of housing markets and complement the overall picture of housing conditions and arrangements sketched here by focusing on the personal/collective experience of individuals/households that produces the aggregate patterns seen in different parts of the housing mosaic.

4.2 HOUSING UNIT TYPES 84.1 percent of households in the survey sample live in an apartment of a walk-up building. 0.6 percent lives in more than one apartment and 4.2 percent live in a separate house or villa. 8.4 percent of households live in rural houses. 1.4 percent live in one separate room or more and 0.8 percent lives in one room or more in a housing unit (i.e. sharing the same housing unit with other household(s)). A tiny percentage (0.5 percent) lives in precarious housing.14 Table 4.1 shows some common patterns. The average number of building levels is 4.9 floors for those living in one or more apartment in a walk-up building. Separate houses have on average 1.5 floors, and for buildings where households live in one room or more, the average number of building levels is 3.2 floors.

Table 4.1: Average Number of Building Floors by Housing Unit Types Average Number of Building Unit Types Count Floors

One apartment or more in a walk-up building 4.9 1,101 Separate house (villa/house or rural house) 1.5 163 One room or more (either separate or in a housing 3.2 29 unit) Precarious housing 1.0 7

Total 4.4 1,300

14 Precarious housing includes places that are not designed primarily for housing, but are occupied by the household at the time of the survey. Examples include parts of buildings inhabited by the doorman or the concierge, a shop or garage occupied by a household, cemetery yards inhabited by families, etc. Shanty houses, tents and kiosks used for housing are also considered precarious housing. Source: Definitions Used in Census 2006, Information and Decision Support Center, April 2007.

4.3 HOUSING UNIT SIZES, NUMBER OF ROOMS AND CROWDING The median gross housing area of the 1,300 units sampled is 80 m2, while the average gross area is almost the same (83.1 m2). Table 4.2 shows that housing gross areas ranging from 65 to less than 90 m2 represent the highest frequency (49.3 percent). Housing with areas from 40 to less than 65 m2 and from 90 to less than 120 m2 comprises 13.7 percent and 23.8 percent of the surveyed housing respectively. Housing with areas from 120 to less than 150 m2 represents 4.9 percent. Smaller housing (less than 40 m2) is 3.9 percent, and larger housing (150 m2 or more) is 4.3 percent.

Table 4.2: Surveyed Households by Current Gross Housing Size Housing Area (m2) Count Percent

Less than 40 m2 51 3.9 40 – 178 13.7 65 – 641 49.3 90 – 310 23.8 120 – 64 5.0 150 or more 56 4.3

Total 1,300 100%

The median net housing area is 73 m2, while the average net area is 76.5 m2. Table 4.3 shows the surveyed households by current net housing size 15 and household income quintiles. The survey data show that, as expected, households in the lower income quintiles tend to live in smaller units. Correspondingly, higher income households are more likely to live in larger units (above the median area). For example, of surveyed units of 150 m2 or more (N=31), almost three-fifths are occupied by households in the fifth (highest) income quintiles.

Table 4.3: Surveyed Households by Current Net Housing Size and Income Quintiles nd st 2 rd th th 2 1 Quintile 3 Quintile 4 Quintile 5 Quintile Housing Size (m ) Quintile Total (%) (%) (%) (%) (%) (%)

Less than 40 14.2 4.8 1.8 2.7 0.8 4.4 40 – 21.2 29.2 23.4 23.6 12.5 22.0 65 – 43.4 48.4 57.6 51.2 43.0 49.1 90 – 16.0 16.0 12.6 17.8 28.9 18.3 120 – 4.2 0.8 2.9 3.7 7.6 3.8 150 or more 0.9 0.8 1.8 1.0 7.2 2.4

Total 100% 100% 100% 100% 100% 100%

15 Net (or usable) housing size excludes the unit’s share of building common areas (building duct, elevator lobby, corridor, etc.) that are included in gross housing size.

Table 4.4 shows the average net housing area per capita by income quintiles. The Survey data show that the average net housing area per capita is in direct correlation with income. Higher income households are more likely to have more net housing area per capita. Table 4.4: Average Net Housing Area per Capita by Income Quintiles nd st 2 rd th th Total Item 1 Quintile 3 Quintile 4 Quintile 5 Quintile Quintile

Average Net Housing Area per Capita (m2 per 13.4 16.1 19.0 24.6 37.6 22.6 capita)

Table 4.5 shows the average net housing area per capita by tenure types. The survey data indicate that the average net housing area per capita is the highest (23.4 m2) for ownership. For units rented under the old law, the average net housing area per capita is 23.0 m2 while it is slightly lower (20.3 m2) for units rented under the new law. The average net housing area per capita is 18.7 m2 for rent-free units (gifts, in-kind privileges, others).

Table 4.5: Average Net Housing Area per Capita by Tenure Types Average Net Housing Area per Tenure Types 2 Count Capita (m per capita)

Ownership (including purchase 23.4 895 from government) Old law rental (including 23.0 151 governmental rental) New law rental (including furnished 20.3 127 rental) Rent-free (including gift, in-kind 18.7 127 privilege, others)

Total 22.6 1,300

Table 4.6 illustrates the average net housing area per capita by unit types. The survey data indicate that the average net housing area per capita is almost the same for apartments and separate houses (23.1 m2 and 22.7 m2). For households living in one room or more, the average net housing area per capita appears to be very low (7.8 m2). Average net housing area per capita is even lower (6.2 m2) for precarious housing.

Table 4.6: Average Net Housing Area per Capita by Unit Types Average Net Housing Area per Capita Unit Types 2 Count (m per capita)

One apartment or more in a 23.1 1,101 walk-up building Separate house (villa/house or 22.7 163 rural house) One room or more (either 7.8 29 separate or in a housing unit) Precarious housing 6.2 7

Total 22.6 1,300

Most respondents in the Survey reside in three- or four-room housing, at 54.3 and 34.5 percent respectively. Only a few households reside in larger housing (5 rooms, 4.0 percent; and 6 rooms or more, 0.5 percent), or in smaller housing (one room or two rooms, at 1.9 and 4.8 percent). The average number of persons per room is 1.26.16

About three-quarters (73.7 percent) of households in the sample use two rooms for sleeping, while 4.9 percent use one and 19.7 percent use three. Only 1.5 percent of sample households use four rooms for sleeping. A very small number (0.5 percent) use one or more rooms for productive activities related to earning a livelihood. Table 4.7 shows the number of rooms and bedrooms by income quintiles. The average number of rooms was found to be almost the same in all quintiles (ranging from 3.2 to 3.6); while the average number of bedrooms was found to be around 2.2 in all quintiles.

Table 4.7: Mean Number of Rooms and of Bedrooms by Income Quintiles Item 1st Quintile 2nd Quintile 3rd Quintile 4th Quintile 5th Quintile Total

Mean no. of rooms 3.2 3.3 3.4 3.3 3.6 3.4

Mean no. of 2.1 2.1 2.2 2.2 2.3 2.2 bedrooms

4.4 HOUSING UNIT AMENITIES Table 4.8 shows that most households in the survey sample (97.2 percent) have a private kitchen in their housing. 1.7 percent of households do not have a separate place for food preparation, and only 1.2 percent has shared kitchens. Table 4.8 also shows that 98.8 percent of households have access to private bathing and toilet facilities while the remaining 1.2 percent have shared bathing and toilet facilities.

Table 4.8: Availability of Amenities in Housing Units of Canal Zone Facility Count Percent

Private kitchen 1,263 97.2 Shared kitchen 15 1.2 No kitchen 22 1.7

Total 1,300 100%

Private bath and toilet 1,284 98.8 Shared bath or toilet 16 1.2

Total 1,300 100%

Almost all households have access to running water either by having a water tap inside the housing unit (97.3 percent) or having a tap inside the building (0.4 percent). Only 2.3 percent of households have no access to running water.

The majority of surveyed housing units have access to sewage lines, while 10.5 percent lack such access.

16 The average number of persons per room is obtained by dividing the total population in occupied housing units by the total number of rooms (United Nations Statistics Division, 2007).

4.5 HOUSING UNIT IMPROVEMENTS Most households (89.9 percent) have made modifications in their housing units at some point since first occupying them. In 2007, only 2.1 percent (N=24) of these households made home modifications (renovations or improvements). The majority of households (91.7 percent) that made improvements/renovations in their housing units during 2007 spent less than or equal to LE 3,000 on these modifications. This group represents 1.7 percent of all 1,300 surveyed households. As for the current status of the unit, 72.2 percent of households indicated they had no need to make modifications. The remaining 27.8 percent identified the required renovations or improvements as mostly repairing or finishing, and improving utilities and services. The home repairs and finishing most needed were internal plastering and/or painting (71.5 percent), wall and/or ceiling repairs (37.6 percent) and flooring renovations (19.3 percent). The most needed utility improvements were plumbing or adding a bathroom (32.9 percent of households), and adding utilities (20.7 percent). 8.8 percent expressed their need to add one room or more to the current house while very low numbers of respondents (2 percent and under) indicated a need to expand their home by such means as closing in a balcony to add space, or dividing up existing rooms.

4.6 EXPRESSED HOUSING UNIT SATISFACTION 90.6 percent of surveyed households were satisfied with their current housing, while the remaining households were totally dissatisfied (N=122). The most commonly identified source of dissatisfaction with housing was insufficient living area, expressed by 63.1 percent. More than two-fifths of dissatisfied households had internal utility problems (44.3 percent), and 31.1 percent had wall cracks. The most frequently identified problems with neighborhoods were inappropriateness of neighborhood standards (19.7 percent), insecurity (13.9) and, noise (9.8 percent). About one-quarter (23.5 percent) of all surveyed households characterized their neighborhood as informal (aashwa’i). Table 4.9 shows that the demand for housing increases with the increase of dissatisfaction with the current housing. Table 4.9: Relation between Dissatisfaction with Current Housing and Expressed Demand 17

Somehow Item Satisfied Dissatisfied Total Satisfied

No. of households with demand 4.2 7.2 13.1 5.8 (%) No. of households without 95.8 92.8 86.9 94.2 demand (%)

Total (%) 100 100 100 100

Total no. of households 872 306 122 1,300

17 See Chapter 6 for a full discussion of “expressed demand.”

4.7 HOUSING TENURE STATUS AND SECURITY Data in Table 4.10 indicate that there are two main tenure types dominating the urban housing stock in Canal Zone: ownership (35.9 percent) and purchase from government (32.9 percent). Rental according to Old Law is 11.5 percent while rental according the New Law is still limited (9.7 percent).

Table 4.10: Distribution of Households by Tenure Types Facility Count Percent

Old Law Rental 150 11.5 New Law Rental 126 9.7 Government Rental 1 0.1 Furnished Rental 1 0.1 Ownership 467 36 Purchase from Government 428 33 Gift 55 4.2 In-kind privilege 50 3.8 Others 22 1.6

Total 1,300 100%

Table 4.11 illustrates the break down of aggregate tenure types by income quintiles. Ownership is evenly represented over all income quintiles except the first quintile. Rent-free acquisition (including gift, in-kind privilege, others) seems more likely in the first quintile than in the other four quintiles, and generally it decreases with the increase of income. Rental under the Old Law is evenly represented over all income quintiles except the first quintile. Rental under the New Law appears more suitable for the third and fourth quintiles, with no clear trend through the quintiles. Table 4.11: Distribution of Households by Tenure Types and by Income Quintiles (%) nd rd th th st 2 3 4 5 1 Quintile Total Tenure Types Quintile Quintile Quintile Quintile (%) (%) (%) (%) (%) (%)

Ownership (including 61.3 72.8 67.6 66.7 74.9 68.8 purchase from government) Old law rental (including 9.9 11.2 11.2 13.1 12.2 11.6 government rental) New law rental (including 9.0 6.4 13.3 11.4 8.0 9.8 furnished rental) Rent-free (including gift, in- 19.8 9.6 7.9 8.8 4.9 9.8 kind privilege, others)

Total 100% 100% 100% 100% 100% 100%

Of the owned units, 88.6 percent are owned by one person (84.5 percent by the household head, 1.2 percent by the spouse, 2.6 percent by one of the parents of the head of household and 0.3 percent by another household member). 11.4 percent of the owned units are jointly owned. Of the owners, 34.4 percent indicate that they have a final contract of their current housing registered at the Real Estate Registrar and 3.8 percent say they have sale contracts ruled valid and binding in court then registered at Real Estate Registrar. Thus, a majority of owners (61.8 percent) have not registered their units. A large majority, 85.4 percent, of households are not worried about the possibility of being evicted from their housing. 4.1 percent say they do not know if that is possible, and 10.5 percent acknowledge it as a possibility.

CHAPTER 5: HOUSING MARKET BEHAVIOR

5.1 INTRODUCTION The previous two chapters presented an up-to-date review of the Canal governorates' current urban housing stock and also profiled its urban households. This provides a snapshot of the existing housing situation but it tells little about how housing units are actually exchanged or acquired through market mechanisms, who the main suppliers and demanders currently are, what prices prevail, and how markets are segmented. Questions such as these are answered in this chapter. Data concerning the housing market are analyzed in terms of housing purchase and rental systems as well as other forms of exchange. All data are drawn from the TAPR II 2008 EHS. All sampled households were asked if they had moved into the current units over the last five years (2003-2008). 345 out of 1,300 households (26.5 percent of the total) responded affirmatively and were then asked to respond to a subset of questions. This allowed an analysis of housing flows and generated results which throw considerable light upon housing market demand, supply, and dynamics over the last five years. For housing purchased over the last five years, respondents were asked about housing prices and payment arrangements, including down payments and installments. They were also asked about the source of financing they used. Data on prices paid for housing were correlated with household income. All price data are in current prices. Housing rental markets in Canal Governorates were also analyzed using questionnaire responses. Rents under Law No. 4 of 1996 (the New Rent Law) and controlled rentals (under the Old Rent Law) were both covered. A particular focus was put on recent housing unit transactions under the New Rent Law, since this form of exchange in the market is becoming more important. Housing provision for the units acquired, purchased or rented during the past five years was reviewed, allowing an examination of housing options in the market. Finally, an indication of current property values of all types of housing units were obtained by asking residents about the perceived market values of the units in which they reside.

5.2 GENERAL HOUSING DYNAMICS 5.2.1 RESIDENTIAL MOBILITY In urban Canal Governorates, it can be inferred from the Survey that roughly 5 percent of households move every year, and that 26.5 percent move within five years. Such mobility rates are quite high when compared to other urban areas in Egypt.

Over the last five years, the number of surveyed households in Canal Governorates who moved each year has been in gradual decline: 2003 83 households 2004 60 households 2005 68 households 2006 55 households 2007 44 households 2008 (first half) 35 households 345 households

5.2.2 LOCALIZED MOVEMENTS BETWEEN HOUSING UNITS Table 5.1 shows the previous residences of surveyed household heads who moved to the present housing unit, both overall (N=1,133 valid responses) and in the last five years (N=281 valid responses). As can be seen, in both cases moves tend to be extremely local, with 87 percent of all surveyed household heads moving within the same neighborhood or same city and 90 percent of household heads moving within the same neighborhood or city within the last five years. Table 5.1: Previous Residences of Surveyed Household Heads

Household Heads All Household Heads Previous Residence Moving in Last 5 years

Count Percentage Count Percentage In same district (shiakha/qism) 302 26.7 81 28.8 In same city/markaz 684 60.4 172 61.2 Another city/markaz in same governorate 7 0.6 3 1.1 In rural area of same governorate 2 0.2 1 0.4 In other city/markaz in another governorate 60 5.3 10 3.4 In rural area of another governorate 77 6.8 13 4.7 Outside Egypt 1 0.1 1 0.4 Total 1,133 100% 281 100%

5.2.3 TENURE STATUS AND INCOME OF THOSE WHO MOVED AND MARKET VERSUS NON-MARKET SHARES Table 5.2 shows the form of tenure of the 345 surveyed households who moved in the last five years. Of these, New Rent Law was the most frequent form of tenure of the acquired housing unit at 27.0 percent, closely followed by Ownership by Purchase from Government18 at 26.1 percent and Ownership by Construction at 13.6 percent. Ownership by Purchase only represented 8.1 percent of all moves.

18 A significant number of housing units in Canal cities were purchased from government bodies, as is explained in Section 5.5.

Table 5.2: Distribution of Households Moving in Last Five Years by Tenure of Acquired Unit

Type of Tenure No. of Households Percent Old Rent Law 7 2 New Rent Law 93 27.0 Government Rent 0 0 Furnished Rent 0 0 Ownership by Purchase on Market 28 8.1 Ownership by Purchase from Government 90 26.1 Ownership by Construction 47 13.6 Ownership by Inheritance 18 5.2 A Gift 18 5.2 In Kind Privilege 24 7.0 Others 20 5.8 Total 345 100%

Two types of transaction exist: market and non-market. Market exchanges (which include New Rents, Furnished Rents, and Ownership by Purchase) represent 35.1 percent of all moves over the last 5 years. “Non-market exchanges" include Government Rent, Ownership by Purchase from Government, Ownership by Construction (land purchase and housing unit development), and Ownership by Inheritance, Gift, and In Kind Privilege.19 Together, they represent 62.9 percent of all moves in the last five years. Old Rent Law moves should also be considered non-market exchanges. Surprisingly, 7 households (or 2.0 percent) stated finding units under the Old Rent Law, even though technically this form of rental was abolished in 1996.20 Thus, 64.9 percent of moves in the last five years did not exchange through market mechanisms. This is a surprisingly high incidence of unit transfers that do not take place on the market, but rather through personal relations and rewards. Of the units exchanged through the market in the last five years, there was a roughly even split between New Rentals and Ownership by Purchase. These market exchanges are dealt with in detail in Sections 5.3 and 5.4 below. Table 5.3 shows the distribution of households who moved in the last five years (N=345) into income quintiles. Movement seems to be evenly found in all income quintiles, except for a slight under-representation in the highest quintile.

19 Government rents as well as Old Law rents are below market rates, that is why they are considered non- market exchanges. Ownership by Purchase from Government is considered also as a non-market exchange, as units provided by the Government for Ownership are heavily subsidized; conditions are put on who qualifies; and the selection of beneficiaries is lengthy, bureaucratic and rather opaque. Ownership by construction is not a market exchange as well, as the final product is not exchanged itself. Ownership by Inheritance, Gift, and In Kind Privilege are non-market exchanges due to the fact that they take place without direct compensation. 20 There are two plausible explanations for this. First, some Old Rent contracts are being made (and back dated) for those who paid heavy key money payments, also called "tanazul". Secondly, some landlords are issuing Old Rent contracts to relatives in order to reduce declared rental income and thus to avoid paying personal income taxes on this income.

Table 5.3: Tenure Types for Those Who Moved in the Last Five Years by Income Quintiles 1st Quintile 2nd Quintile 3rd Quintile 4th Quintile 5th Quintile Tenure Types Total % % % % % Old Law rental 3 2 1 1 0 7 New Law rental 14 11 26 27 15 93 Government rental 0 0 0 0 0 0 Furnished rental 0 0 0 0 0 0 Ownership 16 17 20 18 22 93 Purchase from 11 27 18 23 11 90 Government Gift 5 3 4 2 4 18 In kind 15 1 1 5 2 20 % 19.7% 19.4% 21.4% 23.2% 16.2% 100% Total N 68 67 74 80 56 345

5.2.4 NEW LAW RENTAL MARKETS Although New Rental Law tenure21 only represented 126 cases (or 9.7 percent) of the total households surveyed in Canal Governorates (N=1,300), this proportion is very significant since the New Rental Law has only been on the books since 1996. In the last five years, New Rent systems account for 27.0 percent of all moves, and 77.0 percent of all moves which represented exchanges through housing markets.22 Thus, the New Rent form of market exchange is already a major market segment in Canal Governorates and can be expected to claim a larger and larger share of the total urban housing stock. The emerging importance of New Rents in housing markets in urban Canal Governorates is underscored by the fact that of the 42 cases of household members who had moved away from the surveyed households over the last five years, 50 percent concluded New Rent contracts for their new dwellings.

5.2.5 HOUSING MARKET INFORMATION The most common methods used to search for housing were consulting relatives, friends and neighbors. This can be seen from Table 5.4, which shows the means of search used by households who moved voluntarily in the last five years (N=253 valid responses).

21 The new housing law issued in 1996 decontrolled new rents arrangements, allowing landlords to set market prices for new or vacant units under time-bound contracts. 22 This proportion would be even higher if it is assumed that some of the Old Rent contracts were actually mimicking New Rent market exchanges.

Table 5.4: Means Used to Search for Housing Means Percent Through relatives/friends 42.7 Asking neighbors 29.5 Asking co-workers 2.5 Through advertisements 0.4 Through governmental advertisements 9.2 Through real estate agents 5.7 Alternative housing due to governmental evacuation order 10 Total 100%

75 percent of respondents relied on relatives, friends, neighbors or co-workers for information on housing availability. From this data it can be concluded that the overwhelming majority of search methods depend on word of mouth. In other words, housing market information in the Canal cities tends to be local, informal, and not dominated by the media. In fact, only 0.5 percent of respondents relied on private advertisements and 9 percent relied on government housing program announcements. Another 6 percent relied on real estate agents. It should be, however, pointed out that these real estate agents are mainly individuals who are informal brokers or simsars whose knowledge is very local.

5.2.6 MARKET DISTORTION AND RENT CONTROL In the Canal Governorates, 11.5 percent (N=150) of surveyed households enjoyed fixed rents under the Old Rent Law. Not only is this portion of the housing stock effectively excluded from market exchanges, the rents being paid under the Old Rent Law have no relation to market prices. This can be seen by looking at Table 5.5, which compares rents paid under the New Rent Law (N=123), where market forces are in play, with those paid under the Old Rent Law (N=150).

Table 5.5: Distribution of Tenants According to Actual Rent Paid Under Old and New Laws as of 2008

Contracts under Old Law Contracts under New Law Rent paid per month (LE) Count Percent Count Percent Less than 10 12 8.0 0 0.0 10– Less than 50 42 28.0 0 0.0 50– Less than 100 53 35.3 0 0.0 100– Less than 150 24 16.1 14 11.0 150– Less than 200 15 10.0 20 15.9 200– Less than 300 2 1.3 54 42.9 300– Less than 400 2 1.3 31 24.6 400– Less than 500 0 0.0 1 0.8 500– Less than 1,000 0 0.0 6 4.8 1,000 and above 0 0.0 0 0.0 Total 150 100% 126 100%

As can be seen, the differences are striking. Whereas 36 percent of Old Renters paid only LE 50 or less per month, virtually no New Renters paid this very low rent. And whereas 73 percent of New Renters paid over LE 200 per month, only 2.5 percent of Old Renters paid these amounts. The median rent for Old Renters was LE 75 per month whereas the median rent for New Renters was roughly LE 229 per month.

5.2.7 MODEST AMOUNT OF INFORMAL HOUSING As mentioned above in Section 2.3, a minority or 23.5 percent of housing units surveyed in the Canal Governorates are considered by inhabitants to be located in informal (aashwa'i) neighborhoods. This proportion is less than other regions of Egypt. Characteristics of the units purchased in the last five years vary considerably between informal and formal residential neighborhoods as will be discussed in detail in Section 5.4 below. Also, it will be shown in detail in Section 5.3 that the median monthly rent under New Rent contracts for housing units acquired by renters in informal residential areas was slightly lower than median rents in formal residential areas.

5.3 HOUSING RENTS AND RENTAL SYSTEMS UNDER NEW RENT LAW As previously noted, 93 survey respondents moved to rental units in the last five years under the terms of the New Law, which represented 77 percent of all housing market transactions in urban areas of Canal Governorates during the period. The small size of this sample limits the drawing of definitive conclusions. However, it is possible to uncover general salient features, and for this reason the Survey asked a number of questions about rental arrangements under the New Law. First, of the 93 households who rented under the New Law from 2003-2008, practically all had written contracts (95 percent), and of these, 97 percent of households had kept a copy of the contract. However, only 11.9 percent of households had their contracts registered or endorsed at the Real Estate Registrar (el shahr el aqari). As can be seen from Table 5.6, the duration of New Rent contracts varied considerably, but most tended to be of short duration. For New Rent contracts in the last five years, a very large portion of contracts, over 61 percent, had a length of two years or less. Only 9.8 percent of contracts were for over five years, even though long leasehold arrangements were expressed as desirable by demanders (See Chapter 6). The average (mean) rental period was 7 years but the median rental period was under 2 years.

Table 5.6: Length of Rental Period New Rent Households All New Rent Households Years in last 5 years Count Percent Count Percent ≤ 1 32 25.4 23 24.7 2 39 31.0 34 36.6 3 17 13.5 13 14.0 4 0 0.0 0 0.0 5 19 15.1 14 15.0 6 0 0.0 0 0.0 7 3 2.4 2 2.2 8 3 2.4 1 1.1 9 2 1.6 2 2.2 10 1 0.8 0 0.0 15 1 0.8 0 0.0 36 + 0 0.0 0 0.0 Unlimited 9 7.0 4 4.2 Total 126 100% 93 100% Mean 10 7 Median 2 2

In 47 percent of all New Rents in 2003-2008, the landlord of the rented unit was the owner of the building (who built it), and in the remaining 53 percent the landlord was the owner of the dwelling unit alone. In 40 percent of New Rent cases in the last five years there was a clause in the rental contract which allowed for an annual increase in the rental amount.23 In these cases (N=37), the most common rent escalation was 10 percent per annum for over almost two thirds of the total. When all New Rent tenants (N=126) were asked what were their plans at the end of the contract, 72 percent of tenants aimed to reach an agreement with the owner of the unit to renew the contract, and 12 percent aimed to search for another unit to rent. 7.1 percent had no plans, and only 7.5 percent intended to purchase another unit (if financially capable). For New Rentals in the last five years, 33.3 percent of respondents stated that they paid advance payment on the entire rental amount. This is understood to be quite common, where the monthly rent for the contractual period is agreed, and the landlord then asks for a portion of the total rental payment stream to be paid up front, and the real monthly rent is in some cases then reduced proportionately. Of those who paid advance payments (N=31), the amounts varied considerably, with the most common advances being in the LE 1,000 to 4,000 range. For all New Rentals in the last five years, insurance was paid. The values of monthly rents currently paid by New Rent tenants24 surveyed in the urban areas of the Canal Governorates (N=126) are given in Table 5.5. There is considerable

23 The incidence of rental increase clauses would have been higher, except that some many of the New Rent periods were for a single year (25 percent). 24 Annual rent paid is the nominal value on the rental contract and thus includes any advance payments.

clustering of rents in the LE 200 to 299 per month range (representing 43 percent of the total cases). There are very few rentals over LE 400 per month: Monthly rent less than LE 100 no cases Monthly rent LE 100 - 149 11.1 percent of all new rent contracts Monthly rent LE 150 - 199 15.9 percent of all new rent contracts Monthly rent LE 200 - 299 42.9 percent of all new rent contracts Monthly rent LE 300 – 399 24.6 percent of all new rent contracts The 93 surveyed households who acquired units under the New Rent Law in the last five years came from all income groups: First Quintile: 15.1 percent of new renters Second Quintile 11.8 percent of new renters Third Quintile 28.0 percent of new renters Fourth Quintile 29.0 percent of new renters Fifth Quintile 16.1 percent of new renters

As can be seen, there is a concentration of new renters in the third and fourth quintiles, and an under-representation in the lowest quintile. Table 5.7 presents median incomes and rents paid by tenants under the New Rent Law who moved in the last five years (N=93). It allows a calculation of rent-to-income ratios25 for this group. As can be seen, in the second income quintile (median monthly income of LE 847, median monthly rent of LE 250 per month) tenants are paying 29.5 percent of their income on rent. This ratio is higher than the other income quintiles. The first (poorest) quintile has the next highest ratio, at 27.5 percent. The ratio is less for the other three quintiles, and the highest quintile households only pay 11.1 percent of their income on rents. Such ratios imply that New Law rents are a burden on poorer households, but they are well within international norms.

Table 5.7: Rent to Income Ratios for New Rent Contracts in the Last Five Years, by Income Quintiles Item 1st Quintile 2nd Quintile 3rd Quintile 4th Quintile 5th Quintile Total Count 14 11 26 27 15 93 Median HH annual LE 7,200 10,160 12,000 14,400 21,600 12,000 income Median annual rent LE 1,980 3,000 3,000 3,240 2,400 2,640 Annual rent to % income ratio 27.5 29.5 25.0 22.5 11.1 22.0

The median monthly rent under New Rent contracts for housing units acquired by renters in informal residential areas was LE 200 per month, slightly lower than median rents in formal residential areas (LE 250 per month).

25 The rent-to-income ratio is defined as the ratio of the median annual rent of a dwelling unit and the median annual household income. Source: Urban Indicators Guidelines, Monitoring the Habitat Agenda and the Millennium Development Goals, United Nations Human Settlements Programme, August 2004, p.24

5.4 HOUSING PURCHASE SYSTEMS AND PRICES 2003- 2008 As mentioned previously, in urban Canal Governorates 345 of households surveyed had moved to their current unit in the past five years. Of these, only 113 households or 34.2 percent purchased their units. The small size of this subset limits the reliability of the generalizations that can be inferred from the survey data. Nevertheless some interesting findings can be drawn from the data. Of the households who purchased their units during the past five years, 79.6 percent paid in full and only 20.4 percent paid in installments. As can be seen from Table 5.8, there is no apparent relation to tendencies to pay by installment by income quintile.

Table 5.8: Mode of Purchase by Income Quintile (Percent) 1st Quintile 2nd Quintile 3rd Quintile 4th Quintile 5th Quintile Total Modalities N=14 N=31 N=25 N=24 N=19 N=113 Purchased in full 21.4 6.5 24.0 12.5 47.4 20.4 Purchased in 78.6 93.5 76.0 87.5 52.6 79.6 installments Total 100% 100% 100% 100% 100% 100%

Table 5.9 presents the median price for units bought by households in each quintile. As can be seen, median prices ranged from LE 34,000 to 51,000, with median prices increasing only slightly as one moves to higher quintiles. The price-to-income ratio varies between 2.4 and 4.9 with a strong inverse correlation to income quintiles.

Table 5.9: Prices Paid to Purchase Units Relative to Annual Income, by Quintile for Those Purchasing in the Last Five Years th st nd rd th 5 Item 1 Quintile 2 Quintile 3 Quintile 4 Quintile Average Quintile Value of purchased unit Median 34,920 39,940 40,400 50,438 51,180 41,200 (LE) HH annual Median 7,200 9,600 12,000 15,000 24,000 12,000 income (LE) Ratio of unit price to HH 4.9 4.2 3.4 3.4 2.1 3.4 annual income

As can be seen from Table 5.10, characteristics of the units purchased in the last five years (N=113 valid responses) varies considerably between informal and formal residential neighborhoods. First, Table 5.10 shows that there are dramatic price differences, and that the median size of units purchased in informal areas is only half of the price of units purchased in formal areas. And the median housing area was 70 m2 versus 75 m2 in formal areas. The price paid per m2 in formal areas was 2.5 times that paid in informal areas.

Table 5.10: Prices and Payment Models in the Formal and Informal Sectors in the Last Five Years

Informal sector Formal sector Item N=21 N= 92

% of Purchasers 18.6 81.4 Median price in LE 25,000 50,000 Median price per m2 in LE 190.9 473.7 Median size of units in m2 65 75 Median down payment in LE 0 15,000 Median installment value in LE 80 84.2

The Survey asked questions of those purchasing units in the last five years concerning the sources of funds. The results are presented in Table 5.11 for purchasers who responded (N=113). The single greatest source was household savings from regular income (32.8 percent partially and 32.7 percent totally). The only other significant source mentioned was selling property and assets (28.3 percent partially and 13.3 percent totally).

Table 5.11: Sources of Financing for Housing in the Last Five Years Distribution of Households (%) According to Share of Price/Down Sources of Financing Payment Paid by Source of Finance (Multiple Response) Less than Totally 70–99% 50–69% Total % 50%

Savings from regular income 32.7 0.0 19.5 13.3 65.5 Savings from working abroad 2.7 0.0 4.4 1.8 8.9 Selling property/assets 13.3 6.2 15.9 6.2 41.6 Contributions from relatives 0.0 0.0 1.8 4.4 6.2 Loans from individuals 0.0 0.0 0.0 0.9 0.9

In Table 5.12 all cases of cash housing unit purchases recorded by the Survey in the 2003- 2008 period are listed.26 There were only 20 valid responses. Although the size of this sample is small, it represents real market exchange information (prices and prices per m2 distributed by year and formal/informal sector) which is very hard to come by in Egypt.

One feature of Table 5.12 is that the median price per m2 seems to be much higher, over two times, for formal housing versus informal housing.

26 Cash purchases represented 20 percent of the total purchases in the last five years. The rest were purchases by installments.

Table 5.12: Details of Purchased Units 2003-2008 by Year (Cash Purchase) No. of Mean Unit Median Unit Mean Price Median Price Year Zone Cases Size (m2) Size (m2) (LE/m2) (LE/m2) Formal 4 94 98 618 464 2003 Informal 1 150 150 106.7 106.7 Total 5 105 100 516 455 Formal 4 115 125 606 664 2004 Informal 1 110 110 181.8 181.8 Total 5 114 125 521 640 Formal 4 108 99 384 355 2005 Informal Total 4 108 99 384 355 Formal 2 80 80 1,169 1,169 2006 Informal Total 2 68 68 1,169 1,169 Formal 2 98 98 923 923 2007 Informal 2 108 108 369 369 Total 4 103 98 646 423 Formal 2008 Informal Total 0 0 0 0 0 Formal 16 101 98 663 557 2003-2008 Informal 4 119 130 257 191 Grand Total 20 105 105 582 464

5.5 CURRENT HOUSING PROVIDERS By looking at the origins and sources of housing units (which have been moved into over the last five years), it is possible to gain insights into the nature of housing supply and production in urban Canal Governorates. Of the housing units purchased over the last 5 years (N=118), 46.6 percent (N= 55) were purchased from the building owner/developer and 53.4 percent were purchased from the previous owner of the unit. Table 5.13 shows the breakdown of housing units which were sold by the building owner into type of building owner. The table also draws a comparison between these housing providers of purchased units over the last five years and the suppliers of all purchased units within the housing stock over history. Table 5.13: Purchased Housing Units Distribution by Type of Building Owner History In Last Five Years Type of Building Owner (N=315) (N=55) Individual or group of individuals 9.2 7.2 Informal "ahali" developers 2.2 0.0 Formal private sector companies and developers 1.3 1.8 Public Sector Companies 6.0 5.5 Government Bodies 82.2 85.5 Total 100% 100%

The most significant finding from these figures is the extremely high share of housing purchased from government organizations and public sector companies (88 percent). This high share of government in housing provision is completely unknown in other urban regions in Egypt, and it underscores the common impression that the Canal cities are government towns. It is interesting to note that of all households who purchased units over the last five years (N=55 valid responses), in 47 cases the unit was purchased from government organizations and in another 3 cases the unit was purchased from public sector companies. Thus in over 90 percent of cases the housing seller was government or para-statal organizations. An interesting aspect of housing supply in urban Canal Governorates is the high prevalence of newly acquired units which were built by the occupiers (owner-builders). From Table 5.2 it can be seen that 13.6 percent of all unit acquisitions in the last five years were as owner- builders. In fact, the owner-builder share of all units built or purchased on market in the last five years equals 28 percent. In other words, the owner-builder mode of housing production is a significant factor in urban housing supply in Canal Governorates, in spite of the dominance of the government production mode. In the last five years, of those renting units under the New Law (N=93), 47.3 percent were rented from the building owner/developer and 52.7 percent were rented from the owner of the individual unit. Table 5.14 shows the breakdown of all housing units which were rented from the building owner into type of building owner. The table also draws a comparison between these housing providers of rented units under the New Law over the last five years and the suppliers of all rented units under the New Law within the housing stock since 1996. Table 5.14: Rented Housing Units Distribution by Type of Building Owner History In Last Five Years Type of Building Owner (N=65) (N=44) Individual or group of individuals 73.8 72.7 Informal "ahali" developers 24.6 25.0 Formal private sector companies and developers 0.0 0.0 Public Sector Companies 0.0 0.0 Government Bodies 1.5 1.8 Other and Don’t Know 0.0 0.0 Total 100% 100%

As can be seen from Table 5.14, individuals or informal developers are the predominant type of building owner, with government bodies playing a very minor role in the rental market under the New Law with 1.8 percent representation over the last five years.

5.6 HOUSING RENTS AND PRICES COMPARED TO PERCEIVED VALUES All 1,300 households surveyed were asked what they believed was the actual current market value of the units they occupy. The average value per unit was LE 70,245 and the median value was LE 60,000. Table 5.15 shows the distribution of these values by intervals. As can be seen, 18.2 percent of all units were valued at less than LE 30,000, and 45.3 percent were valued at under LE 50,000. Only 2.2 percent of all units were valued at above LE 200,000.

Table 5.15: Current Value of Occupied Units According to Respondents Current Value (LE) Number of Respondents Percent Less than 10,000 74 5.7 10,001 – 67 5.2 20,001 – 95 7.3 30,001 – 136 10.5 40,001 – 216 16.6 50,001 – 280 21.5 75,001 – 329 25.3 100,001 – 34 2.6 150,001 – 41 3.2 200,001 – 24 1.8 300,001 – 2 0.2 500,001 + 2 0.2 Total 1,300 100%

All 1,300 households surveyed were also asked what they believed would be the market rent of their units should they be let out under the New Rent Law (which reflects market rates). The average rent per unit was LE 336.5 per month and the median rent LE 300 per month. It is possible to calculate the perceived market value of all units surveyed expressed as LE per m2 (based on the gross area of the unit), as is shown in Table 5.16. As can be seen, only 10.2 percent of units were valued at LE 300 per m2 or less. And 41.9 percent of units were valued at between LE 500 per m2 and LE 900 per m2. A significant 33 percent of units were valued at LE 1,000 per m2 to LE 1,500 per m2. The average (mean) value was LE 827 per m2 and the median value was LE 769 per m2.

Table 5.16: Current Perceived Value of Occupied Units of Gross Area Current Value (LE per m2) Number of Respondents Percent 1–100 23 1.8 101–200 47 3.6 201–300 63 4.8 301–400 67 5.2 401–500 77 5.9 501–600 140 10.8 601–700 131 10.1 701–800 120 9.2 801–900 154 11.8 901–1,000 109 8.4 1,001–1,200 215 16.5 1,201–1,500 215 16.5 1,501–2,000 33 2.5 2,001–3,000 38 2.9 3,001–4,000 4 0.3 4,001–5,000 0 0.0 5,001+ 4 0.3 Total 1,300 100%

It is possible to track the evolution of perceived market values of housing units for those who have moved over the last five years, as is shown in Table 5.17. As can be seen, there appears to be no observable trend, with median values per m2 remaining within the same range over the whole period (except for 2008, which for some reason shows a much lower value per m2 than other years). Table 5.17: Perceived Current Values for Units Acquired in the Last Five Years by Year Item Years 2008 2007 2006 2005 2004 2003 Total Count 35 44 55 68 60 83 345 Price/Gross Housing Area Median 393.8 580.6 634.9 559.9 585.8 604.9 608.7 Mean 393.8 771.1 726.7 600.4 665.2 639.8 658.6 Count 35 44 55 68 60 83 345 Price/Net Housing Area Median 424.3 607.6 671.5 640.4 626.8 651.4 660.1 Mean 424.3 826.2 780.9 643.5 713.0 684.5 706.0

Table 5.18 shows current rents as a percentage of perceived market rental values. Of all Old Law renters, the ratio of the actual rent to the perceived rent averaged only 28.1 percent. However, for all New Law renters, the ratio of the actual rent to the perceived rent averaged 92.7 percent. In other words, under the New Rent regime actual rents are very close to perceived market rents, whereas under the Old Rent regime there is a huge gap, with actual rents under one third of perceived market rents.

Table 5.18: Current Rents as a Percentage of Perceived Market Values, 2008 Average Type of Rent No. of Tenants Actual Rent as a % of Perceived Value Old rent law 150 28.1 New rent law 126 92.7 Governmental rent 1 21.7 Furnished flat rent 1 66.7 Renting by all types 278

CHAPTER 6: EXPRESSED DEMAND FOR HOUSING UNITS

6.1 INTRODUCTION The 2008 EHS for urban areas of Canal governorates included a subset of questions directed at individuals who had been actively searching for a housing unit and are still searching. It is important to note that this “expressed demand” may not equal real demand behavior in the market because it is more a reflection of perceptions and preferences. Even so, the results allow a better understanding of the characteristics of persons who are seeking housing and their expressed desires. First the magnitude of expressed demand and its determinants is assessed. The socioeconomic characteristics of demanders are then explored in terms of age categories, marital status, reasons for demand, employment, income and savings. Current housing conditions for demanders are also examined. For desired housing units, expressed demand is investigated for both purchase and rental and for preferred types of units and arrangements for the financing of unit purchase and rental down payment. Preferences for government- versus private sector-supplied housing were also investigated, along with the housing features desired in terms of size, number of bedrooms, finishing and type of building. Expressed demand for serviced land plots was also examined. Due to the very small sample size (77 demanders) for urban areas of Canal governorates, it is difficult to assume that some of the indicators generated here are statistically significant. Thus, the reader is urged to be very cautious in generalizing conclusions.

6.2 MAGNITUDE OF EXPRESSED DEMAND AND ITS DETERMINANTS According to the 2008 Survey of Canal governorates, out of 5,492 persons (the number of members in all the households sampled), only 77 persons were actively seeking housing, or 1.4 percent of all individuals. Demander individuals were found in 75 households, meaning that at least one demander was present in 5.8 percent of urban households in Canal governorates.27 From these figures it can be inferred that in mid 2008 there were a total of some 22,000 urban individuals currently actively seeking housing units in Canal governorates, and that these individuals are found in 21,400 households. It is interesting to see why the vast majority of households did not include a member who was seeking housing. A full 68.9 percent of all households surveyed (N=1,300) stated they currently did not have a member in need of housing. Of the remaining 31.1 percent of households, a large majority (80.8 percent or 308 households) stated that they have a desire for new housing, but that they were not financially capable and thus no household members have bothered to search. This points to a huge "desire" or latent demand for housing in 23.6

27 Heads of households who expressed their willingness to acquire units now for future use by their children are considered part of expressed demand.

percent of all surveyed urban households in Canal governorates which does not translate into active demand behavior in the market. The main reason for seeking a housing unit were cited by the 77 identified demanders as follows: To be able to get married 45.5% Nuclear family wants to live independently 20.8% Seeking ownership of housing 18.2% Present unit is too small 6.5% Other reasons 9.0% 100%

Among all demanders, 23.4 percent have been searching for one full year or a part of a year, 27.3 percent for two years, and 22.1 percent for three years. 19.5 percent had been searching for five or more years. The distribution of demanders by income quintile shows that expressed demand is highly concentrated in the highest two (richest) quintiles, where 72.8 percent of demanders can be found, as shown in Table 6.1.

Table 6.1: Breakdown of Demanders by Household Income Quintiles Item 1st Quintile 2nd Quintile 3rd Quintile 4th Quintile 5th Quintile Total No. of Demanders 10 3 8 27 29 77 % of Total No. of 13.0 3.9 10.4 35.1 37.6 100% Demanders

The main search method used by demanders was stated to be as follows (multiple response possible):

New town agency announcements 40.3 percent Through relatives and friends 37.7 percent Through specialized publications 28.6 percent Through newspaper advertisements 23.4 percent Through field visits 23.4 percent Through real estate agents (simsars) 20.8 percent Internet sites 5.2 percent In Canal cities demanders appear to use multiple means of searching, with an even mix of traditional/personal means and formal means. This is in contrast to most other parts of urban Egypt, where informal and personal means of searching for housing dominate for demanders. Demanders were also asked what was the main form of media used to keep informed about housing markets and issues. 24.0 percent responded that they mainly used television, 7.8 percent newspapers, 24.0 percent magazines, and 1.3 percent internet. 40.3 percent responded that they use no media to seek housing.

6.3 SOCIO-ECONOMIC CHARACTERISTICS OF HOUSING DEMANDERS Of the 77 demanders interviewed in the Survey, 72 (or 93.5 percent) were males. Of total demanders, 46.8 percent were single, 46.8 percent were married, and 6.5 percent were widowed or divorced. 33.8 percent of demanders were heads of household and other household members were the remainder. Inevitably, some of the head of household demanders were searching for housing for their children. As can be seen from Table 6.2, almost all demanders (66.3 percent) are aged in their twenties and thirties, with 45.5 percent being in their twenties. A small but significant portion were over 40 years of age (24.7 percent).

Table 6.2: Demanders Distribution by Age Age Demander Count Percent

19 or less 2 2.6 20–24 16 20.8 25–29 19 24.7 30–34 16 20.8 35–39 5 6.4 40–49 12 15.6 50–59 3 3.9 60+ 4 5.2

Total 77 100 %

The educational status of demanders is shown in Table 6.3. As can be seen, demanders had overall higher educational attainment than the general population (compare with Table 3.3), with a particularly high representation of university graduates (22.1 percent).

Table 6.3: Educational Status of Demanders Education status Demander Count Percent

Illiterate 14 18.2 Literate (no degree) 1 1.3 Below average education (elementary, preparatory only) 8 10.4 Average education 34 44.2 Above average but below university degree 3 3.8 University degree 16 20.8 Post-graduate degree (Masters, Ph.D.) 1 1.3 Total 77 100%

A total of 92.2 percent of demanders were currently employed. Of those employed, reported monthly incomes were low, with 67.1 percent stating incomes of between LE 300 and 900 per month, and the median monthly income was LE 600, as shown in Table 6.4.

Table 6.4: Distribution of Employed Demanders According to Monthly Income Total Monthly Income (LE) Demander Count Percent Less than 300 9 11.8 300 – 30 39.6 600 – 21 27.6 900 – 9 11.8 1,200 – 1 1.3 1,500 – 4 5.3 2,000 – 1 1.3 3,000+ 1 1.3 Total 76 100%

6.4 DEMAND FOR BUILT UNITS VERSUS LAND Only one of the 77 surveyed demanders is looking for serviced land to build upon, whereas all the rest are looking for built or under construction units. Of those looking for units (N=76), 94.7 percent are looking for apartments in a building of less than five floors and the rest are looking for apartments in a building of five or more floors. Since only one demander is seeking land, no conclusions can be drawn about this sub-set of demanders.

6.5 DEMAND BY LOCATION AND MOBILITY 33.8 percent of demanders are mainly looking for units in the same neighborhood (shiakha or qism), and 61.0 percent are looking for units elsewhere in the same city. Only 5.2 percent are looking in another city or rural area within the same governorate, and none are looking in another governorate. The reasons for demanders focusing on certain areas are clear. The most common reasons mentioned are (in order of importance, multiple responses were possible):

Reasonable prices 63.6 percent Proximity to relatives and friends 55.8 percent Proximity to work 42.9 percent Availability of transportation 39.0 percent Availability of services and utilities 35.1 percent Social standing of area 20.8 percent Availability of health services 15.6 percent Availability of education services 10.4 percent Quiet neighborhood 5.2 percent Only a very small number of demanders (three cases or 3.9 percent of the total) were concentrating on finding units in the new urban communities. All three of these were looking in Sheikh Zayed (outside of Cairo). None were interested in either 10th of Ramadan or New Salhia, the two new towns closest to the Canal Zone.

53.9 percent of demanders would accept to live in a small unit at the beginning of marital life. And 65.8 percent of demanders accept the idea of upgrading one's unit over time.

6.6 DEMANDS BY TENURE TYPE Most demanders of units (N=76) wish to find properties for ownership (61.8 percent), while 27.8 percent prefer long term lease. Only 10.5 percent prefer short term lease. It should be noted that half of demanders for apartments expressed willingness to rent a unit at first and eventually owning it as financial conditions improve. For apartment demanders seeking to purchase by installment (N=47), Table 6.5 shows the preferred number of years for payments. As can be seen, only 8.5 percent would accept a period of 10 years or less, and the median period is roughly 27 years.

Table 6.5: Number of Preferred Years for Apartment Demanders to Pay by Installment

Number of Preferred Years to Pay Installment

Years Years Count Percent Cumulative Percent 0–5 1 2.1 2.1 6–10 2 4.3 6.4 11–15 2 4.3 10.7 16–20 13 27.6 38.3 21–25 1 2.1 40.4 26–30 25 53.2 93.6 31–35 1 2.1 95.7 36–40 2 4.3 100% Total 47 100%

Table 6.6 shows the preferred length of rental arrangements for demanders seeking rental tenure (N=13). This preference among demanders for long term leasehold runs completely counter to current market realities. From Chapter 5, it is clear that most rentals signed into contract in the last five years are for short periods (median is only 2 to 3 years).

Table 6.6: Number of Preferred Years for Apartment Demanders to Pay Rent

Number of Preferred Years to Pay Rent

Years Years Count Percent Cumulative Percent 0–5 1 7.7 7.7 16–20 2 15.4 23.1 21–25 2 15.4 38.5 26–30 2 15.4 53.9 46–50 1 7.7 61.6 56–60 5 38.4 100% Total 13 100%

6.7 FINANCING AND FINANCING PREFERENCES Of all demanders, 59.7 percent state they are currently saving to acquire a unit or land, and over three-quarters of those who are not saving intend to do so in the future. Of those who are currently saving (N=46), the total amount saved so far has a median of LE 3,000. When asked if they were saving or could save regularly, 46 demanders answered affirmatively. For these demanders, 39 per cent could only save LE 100 per month or less, and the median savings per month was LE 150. Only 9 percent could save more than LE 300 per month. Of all demanders, only 6 cases (8 percent of total demanders) state they themselves have personal property which they could sell to acquire a housing unit or land. In addition, of all demanders, only 11.7 percent state that other members of their household have personal property which could be used to help finance the desired unit. Of all demanders, 23.4 percent currently have financial dealings with banks or other financial institutions and another 7.8 percent have had dealings in the past. A high portion, 68.8 percent of demanders, do not nor ever have had financial dealings with banks or other financial institutions. (For those who have financial dealings, most are with banks and post offices.) Of all demanders, 49.4 percent would like to obtain a bank loan to finance the total cost of the unit. Of these, over 65 percent would prefer an interest rate of 5 percent. And 47 percent say they have sufficient guarantees to obtain a bank loan. Of the majority of demanders who do not like taking a loan (50.6 percent of total demanders; i.e. N=39), the following are the main reasons (multiple responses possible):

Fear unable to repay the loan 51.3 percent Reluctance to be indebted 51.3 percent Interest increases the installment payments 28.2 percent Have no guarantees/collateral 25.6 percent Loan interest is sinful 15.4 percent

Even though it is clear that there is little enthusiasm for loans to assist housing unit acquisition, of those seeking to purchase units (N=47) all prefer installment payments over cash. And of those seeking to rent units (N=29), 45 percent prefer to pay a down payment or advance payment on the rent and enjoy a long term lease. For those seeking housing under rental or installment payments, the preferred length of payment period was unrealistically long. For example, 45 percent of demanders preferred an installment/rental period of 26 to 30 years. Among all demanders (valid response, N=77), there were a significant number who expect a relative or friend to help finance the unit. For example, 27.3 percent expected help from parents, 6.5 percent from siblings, 10.4 percent from other relatives, and 5.2 percent from friends. The most common type of help stated was to cover part of the price (57.6 percent), followed by providing an interest-free loan (39.4 percent).

6.8 KNOWLEDGE OF AND PREFERENCES FOR GOVERNMENT-SUPPORTED HOUSING PROGRAMS Among all demanders, 83.1 percent are looking for government-provided housing, only 2.6 percent are looking for housing on the private market, and the remaining 14.3 percent are looking for both types. This is an extremely high portion of demanders oriented towards government housing. Of those preferring government-provided housing, the most common reasons were as follows (multiple responses possible): Reasonable price 78.7 percent Appropriate installment period 46.7 percent Government programs are more believable 34.7 percent Eligibility for a subsidy 28.0 percent It should be added that, of those preferring government housing, over 97 percent thought that they deserve government subsidy. Interestingly, only 31.2 percent of total demanders had heard about the National Housing Program (NHP), mainly through newspapers. Of those demanders who had heard about it, 29 percent consider that the units offered by the NHP were suitable, 8 percent considered them unsuitable, and the large majority (63 percent) did not know enough about the program offerings. Of all demanders, only 30 percent had heard of the mortgage finance system in Egypt and the existence of mortgage companies. Of these (N=23), only 9 percent expressed a liking for mortgages, 17 percent rejected them, and 74 percent did not know enough about the terms. Only 20 percent of all demanders were members of a syndicate, union, or employees society, and of those 80 percent preferred to acquire a housing unit through such organizations.

6.9 CHARACTERISTICS OF DEMANDED UNITS For all unit demanders (N=278), Table 6.6 shows the preference by size of the desired dwelling unit. The median size is 80.0 m2 and the average size is 85.2 m2.

Table 6.7: Distribution of Apartment Demanders According to Total Housing Unit Area Being Sought Total Area of Housing Unit Count Percent Cumulative Percent Demanders Seek (m2) 31–40 2 2.6 2.6 41–50 1 1.3 3.9 51–60 5 6.6 10.5 61–70 15 19.8 30.3 71–80 19 25.0 55.3 81–90 2 2.6 57.9 91–100 27 35.5 93.4 101–125 1 1.3 94.7 126–150 4 5.3 100% Total 76 100%

Among all apartment demanders: 7.2 percent are looking for one bedroom units; 68.0 percent are looking for two bedroom units; and 20.5 percent are looking for three bedroom units. 4.4 percent are looking for units with four or more bedrooms. A total of 45 percent of unit demanders seek finished apartments, while 50.7 percent will take whatever they can find.

ANNEX A: CANAL GOVERNORATES PRIMARY SAMPLING UNITS Table A.1: List of PSUs in Canal Governorates Serial Number of Governorate Qism/Markaz Shiakha Numbers PSUs

Ibrahim Hassanein – previously 1 Portsaid El-Sharq Qism 1 Al-Ifrang Sharq Mostafa Hamza – previously Al- 2 Portsaid El-Sharq Qism 1 Ifrang Gharb 3-4 Portsaid El-Arab Qism El-Ezab 2 5 Portsaid El-Manakh Qism Al-Galaa 1 6-7 Portsaid El-Manakh Qism El-Manakh 2 8-16 Portsaid El-Zohour Qism El-Zohour 9 17-18 Portsaid Portfouad Qism Portfouad City 2 19 Portsaid El-Dawahy Qism As-Salam 1 20-21 Portsaid El-Dawahy Qism El-Qaboty 2 22-23 Portsaid El-Dawahy Qism Bank El-Iskan 2 El-Ganoub (Part) – including As- 24 Portsaid El-Ganoub Qism 1 sedik 25 Portsaid El-Ganoub Qism (Thani) El-Ganoub (Part) 1 Two cities of Faisal and As- 1-6 Suez Faisal Qism 6 Sabbah Shiakha Khames – including El- Ganayen and its components: El- 7-10 Suez El-Ganayen Qism Shanoufa, Goneifa Kabrit, El- 4 Kamalo El-Dereiissa, El-Mahatta El-Malia and Manshyet Alef Qism Awal – and under it Port- twafiq including El-Manteqa El- 11-12 Suez Suez Qism Horra, Az-Zaiteyat, and the 2 residential area of petroleum refinery plant 13 Suez Suez Qism Qism Thani 1 Qism Thaleth – including the 14-20 Suez Al-Arbe’en Qism area of petroleum refinery plant 7 in the western part 21-23 Suez Al-Arbe’en Qism Qism Rabe’e 3 24 Suez Attaqa Qism Al-atka 1 25 Suez Attaqa Qism Medinet El-Semad 1 1 Ismailya El-Qantara Markaz El-Qantara Gharb City 1 2 Ismailya El-Qantara Sharq Qism El-Qantara Sharq City 1 3 Ismailya Ismailya Qism Awal At-Temsah 1 4 Ismailya Ismailya Qism Thani El-Araysha El-Gedida 1 5-7 Ismailya Ismailya Qism Thani El-Hekr 3 Monshaat A-Shohada’ – 8-9 Ismailya Ismailya Qism Thani 2 previously Araysheyet Al-Abeed Sheikh Zayed Hai – in addition to 10-12 Ismailya Ismailya Qism Thaleth El-Herafyeen District and El- 3 Iskan New District

Serial Number of Governorate Qism/Markaz Shiakha Numbers PSUs

13 Ismailya Ismailya Markaz Abu-Soweir El-Mahata City 1 14 Ismailya At-Tal Al-Kabir At-Tal Al-Kabir City 1 15 Ismailya At-Tal Al-Kabir El-Qassassin El-Gedida City 1

ANNEX B: CENSUS POPULATIONS OF CANAL GOVERNORATES Table B.1: Census Populations of Canal Governorates 1996 2006 Governorates All Urban All Urban Portsaid 472,335 472,335 570,603 570,603 Suez 417,527 417,527 512,135 512,135 Ismailiya 714,828 359,645 953,006 432,014 Total Canal Zone 1,604,690 1,249,507 2,035,744 1,514,752 Source: CAPMAS, Census of Egypt 2006, final results

Technical Assistance for Policy Reform II BearingPoint, Inc, 8 El Sad El Aali Street, 18th Floor, Dokki, Giza Egypt Country Code: 12311 Phone: +2 02 335 5507 Fax: +2 02 337 7684 Web address: www.usaideconomic.org.eg