Report Number: 41180 THE WORLD BANK Public Disclosure Authorized ARAB REPUBLIC OF EGYPT ANALYSIS OF HOUSING SUPPLY MECHANISMS FINAL NOTE Public Disclosure Authorized Public Disclosure Authorized February 2007 Sustainable Development Department Public Disclosure Authorized Middle East and North Africa CURRENCY EQUIVALENTS (Exchange Rate Effective February, 2006) Currency Unit = Egyptian Pound (LE) Egyptian Pounds 5.71 = US$1 ABBREVIATIONS AND ACRONYMS CAPMAS Central Agency for Public Mobilization and Statistics ESW Economic Sector Work ECES Egyptian Center for Economic Studies FY Fiscal Year GCR Greater Cairo Region GOE Government of Egypt GOHBC General Organization for Housing and Building Cooperatives GOPP General Organization for Physical Planning GSF Guarantee and Subsidy Fund HDB Housing and Development Bank HFF Housing Finance Fund ILD Institute for Liberty and Democracy IDSC Information and Decision Support Center MENA Middle East and North Africa Region MHUUD Ministry of Housing, Utilities and Urban Development MOI Ministry of Investment MOLD Ministry of Local Development MOMDP Ministry of Defense and Military Production NAHP National Affordable Housing Program NAHPA National Affordable Housing Program Agency NIB National Investment Bank NUCA New Urban Communities Authority PPP Public Private Partnership TAPR II Technical Assistance for Policy Reform II USAID Unites States Agency for International Development WB World Bank Vice President: Daniela Gressani Country Manager/Director: Emmanuel Mbi Sector Director: Inger Andersen Sector Manager: Hedi Larbi Task Team Leader: Ahmed A. R. Eiweida Task Manager/Study Author: Sameh Wahba Table of Contents TABLE OF CONTENTS............................................................................................................................................... I LIST OF FIGURES...................................................................................................................................................... III LIST OF TABLES ....................................................................................................................................................... III LIST OF BOXES ......................................................................................................................................................... IV ACKNOWLEDGMENTS .............................................................................................................................................. IV EXECUTIVE SUMMARY............................................................................................................................................. VI CHAPTER 1. INTRODUCTION....................................................................................................................................1 1.1 Objective and methodology.........................................................................................................................1 1.2 Contents ........................................................................................................................................................3 1.3 Limitations....................................................................................................................................................3 CHAPTER 2. EVOLUTION OF HOUSING POLICIES IN EGYPT...................................................................................4 2.1 Evolution of housing policies in Egypt in the past five decades and their effect on the housing market .................................................................................................................................................................4 2.2 New housing policies and programs in Egypt............................................................................................7 CHAPTER THREE. FORMAL HOUSING SUPPLY AND STOCK CHARACTERISTICS IN URBAN AREAS IN EGYPT ........9 3.1 Introduction..................................................................................................................................................9 3.2 Formal housing Stock in urban areas in Egypt.........................................................................................9 3.3 Government entities responsible for housing supply ................................................................................17 The New Urban Community Authority (NUCA)............................................................................................18 The General Organization for Housing and Building Cooperatives................................................................19 The Joint Projects Agency...............................................................................................................................20 The Housing Finance Fund .............................................................................................................................20 The Housing and Development Bank..............................................................................................................21 Governorates ...................................................................................................................................................21 3.4 Government-built housing products and characteristics .........................................................................22 Low-Cost/Economic Housing .........................................................................................................................22 Mubarak Youth Housing Project.....................................................................................................................25 Future Housing program..................................................................................................................................27 Sites-and-Services and similar approaches......................................................................................................27 Family Housing ...............................................................................................................................................28 Emergency Housing ........................................................................................................................................29 Public-Private-Partnerships (Free Housing)....................................................................................................30 National Housing Program..............................................................................................................................31 3.5 Rental housing market: reforms after five decades of rent control.........................................................32 3.6 Vacant Housing Stock in the Formal Housing Market.............................................................................33 3.7 Housing Investment .....................................................................................................................................36 Overall Investment ..........................................................................................................................................36 Private Sector Investment in Housing Construction........................................................................................37 3.8 Mechanisms for Housing Finance in Egypt ...............................................................................................39 3.9 Assessing the formal housing supply system in Egypt ..............................................................................41 CHAPTER FOUR: INFORMAL HOUSING SUPPLY IN EGYPT: TYPOLOGIES, QUANTITIES AND QUALITIES............43 i 4.1 Introduction..................................................................................................................................................43 4.2 Informal Settlements Population In Egypt ................................................................................................43 4.3 Typologies and number of informal settlements in Egypt........................................................................45 4.4 Informal land acquisition and housing construction mechanisms and characteristics..........................52 Socio-economic conditions in three informal settlements in the Greater Cairo Region..................................53 Agricultural land conversion and informal housing development process......................................................55 Financing the Construction of Informal Housing Units ..................................................................................58 Dealing with local authorities when building without permit .........................................................................58 Land Prices within Informal Settlements ........................................................................................................59 Construction Cost, Prices of Housing Units for Sale or for Rent ....................................................................60 Selling Prices and Rental Values of Housing Units in Informal Settlements..................................................61 Housing Supply and Demand in Informal Settlements ...................................................................................62 Access to infrastructure in informal settlements..............................................................................................63 Willingness to pay for formalization...............................................................................................................64