Annual Report - Orascom Development

New Business
Tamweel Mortgage
Financing Company
OHD obtained Egypt’s fourth mortgage license during 2006 and
has an authorised capital of LE 500 million and a paid in capital of
LE 12.5 million increasing to LE 50 million within 12 months. Majority
owned by OHD, Tamweel will create operational synergies between
divisions. We expect Tamweel to play a large part in the future of
Orascom Housing Communities, although the company will also
benefit from offering mortgage finance to overseas investors within
the resort towns. We plan to commence mortgage operations during
2007 in line with our first phase of low income housing at our 6th
October City project.
Orascom Housing
Communities (OHC)
During 2006 we launched Orascom Housing Communities, a new
OHD company, strategically focused on building affordable housing
throughout Egypt.
We are actively seeking to invest in new areas,
diversifying to spread risk across the business.
The results of a market study during 2006 highlighted a current deficit
of over 1 million units of low cost housing within Egypt. (USAID Study,
June 2006). This demonstrated a demand market, upon which OHC
intends to capitalise through the development of low cost housing units
and towns. As part of its goal to fulfill the deficit of low cost housing,
OHC plans to build over 50,000 low cost units over the next five to
seven years in the initial phase of the project.
To enable us to accomplish this mission we have been awarded
9.2 million sq mt of land in the 6th of October City on the outskirts of
Cairo. We have also been offered land in El Fayoum and on the Red
Sea coast.
In partnership with Mexican house-building company Homex and
other U.S. based partners, we have 58% ownership of OHC. Using the
proven Homex building model and IT-led labour plan we will use local
materials and create jobs for local people.
Development of low income towns
Within the cost of the units OHC has incorporated the cost of
developing the town infrastructure. This includes schools and
a hospital, which will be handed back to the government for
management, in addition to retail and commercial properties
which will be managed privately.
OHC will offer 63 sq mt two bedroom homes on a 150 sq mt plot
of land. We will also offer the option to buy up to 80 sq mt three
bedroom units for a higher payment.
The Egyptian Government offers an LE 10,000 subsidy per house and
we expect the costs of aterials and labour to remain comparatively
low. OHC’s uthorised capital is currently LE 600 million, with a paid
in capital of LE 60 million. We estimate the total investment to be in the
region of LE 2.8 billion.
Future growth
Given the scale of demand for low cost housing in other underresourced
countries, we believe that there is a strong market for this
business model outside of Egypt. We are already planning meetings
for 2007 with the Pakistani Government and Yemeni Government to
discuss their social housing needs.
We are proud to be part of this project, as we believe that it is important
for the development of Egypt, for employment through job creation
and for social stability through community development.