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Egyptian construction companies are about to have a lot of business here: The National Housing Company (NHC) is set to launch a limited tender for Egyptian construction companies to bid on USD 200 bn worth of housing and infrastructure projects in the kingdom, a source with knowledge of the matter told EnterpriseAM Egypt. The NHC met with 16 local companies and the Egyptian Housing Ministry earlier this week to present the initiative, which includes infrastructure projects in Makkah, Tabuk, and Jazan.
Who’s in the running? Leading Egyptian construction players, including Orascom Construction, Hassan Allam Construction, Arab Contractors, Petrojet, Nasr General Contracting, and Alshams for Contracting participated in the talks. The meeting reportedly touched on the companies’ experience implementing large infrastructure projects and their ability to follow through on a contract.
There’s still a few hurdles to be crossed before contracts can be inked: The Central Bank of Egypt is yet to give banks the greenlight to issue letters of guarantee in USD or SAR, a crucial step for Egyptian firms to enter the Saudi market and secure foreign currency, the source explained. Discussions are also underway to establish a risk fund at the central bank to facilitate the issuance of guarantees for these companies. In addition to the guarantees, the NHC has proposed increasing the issuance commission as an incentive for banks to facilitate the process.
There are plenty of Egyptian companies already developing projects in the kingdom with the NHC: Talaat Moustafa Group began selling units in May for its first development both in Saudi Arabia and outside of Egypt. The mixed-use SAR 65 bn Benan City project in Riyadh that was developed in partnership with the NHC will be fully built out over eight years and eventually house 27.8k residential units, along with a sports club and health, educational, and commercial services. Al Ahly Sabbour also has a Riyadh real estate project in the works. Our friends at Hassan Allam Construction Saudi were also awarded a contract last month to develop Port of NEOM’s Container Terminal 1 and a related marine services area.
REMEMBER– The Saudi real estate industry is under pressure to keep up with demand as the country’s population is on track to grow, with the share of expats rising to 50% from a current 42% by 2030, S&P Global said earlier this year. Supply — particularly in Riyadh and Jeddah — remains tight, causing inflation to accelerate as rent prices rise. Saudi has some USD 103.1 bn-worth of active building projects, with around 900 projects worth a combined USD 50 bn currently in the construction phase.
