Arabtec’s $40 billion Egypt project cut to just a tenth of original size



Arabtec’s planned US$40 billion low cost housing project could be scaled back to just a tenth of its original size, Egypt’s housing minister was reported as saying on Tuesday.

According to a report in Al Masry Al Youm newspaper quoting the Egyptian housing minister Moustafa Madbouly, an ambitious deal between Arabtec and the Egyptian government to build a million homes across the country could be limited to just a first phase of 100,000 units in the cities of Obour and Badr to the east of Egypt's capital.

“Negotiations with the company are currently taking place over the building of 100,000 units within five years,” Mr Madbouly was quoted as saying. “There is no place for talks about assigning the million-unit project announced 18 months ago.”

Arabtec and the Egyptian government signed an initial agreement to develop the $40bn project across 13 sites.

Egypt’s president, Abdel Fattah El Sisi, said a year ago that it would take five years to develop with construction originally slated to start last year.

Arabtec declined to comment on Tuesday. Last month the company denied that it was pulling out of the project while company insiders stressed that executives are continuing with negotiations.

“All of these media comments seem like death by a thousand cuts to the project,” said one analyst who asked not to be named.

Arabtec, in which the Abu Dhabi Government fund Aabar is the largest single shareholder, last month announced a second-quarter loss of Dh996.4 million, compared with a profit of Dh113.5m in the year-earlier period, which it attributed to "a number of poorly performing projects".

At the time, the company said that it was “taking corrective action in response to these legacy issues”, with the benefits likely to show in its fourth-quarter results.

Arabtec shares gained 0.5 per cent on Tuesday, on top of Monday’s 3.7 per cent rise. But for the year to date the shares are down 30.8 per cent.

lbarnard@thenational.ae

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