Egypt’s construction sector faces delays
22 February 2023
This package on Egypt’s construction and transport sectors also includes:
> Egypt’s El-Attal launches $229m development
> Qatari Diar selects New Cairo project contractor
> Japan inks a new Cairo metro loan
> NMDC to execute $272m Egypt dredging works
> Bidders prepare Egypt dry port proposals
> Egypt qualifies firms for schools PPP

After seven years of continuous growth, Egypt’s construction sector is showing signs of wobbling amid the country’s economic troubles.
The value of construction and transport contract awards in Egypt has grown every year since 2015 and rose to record highs in the past two years, according to regional projects tracker MEED Projects. It grew by 44 per cent to $19.3bn in 2021 – from $13.4bn in 2020 – before rising again by 31 per cent to $25.4bn in 2022.
In January, however, the value of construction and transport contract awards fell to less than $200m. This was the lowest monthly total since July 2016, and well below the $2.6bn of contract awards in January 2022.
Although the general outlook for the construction sector is strong, economic volatility presents downside risks, at least in the short term.
“Things are at a standstill for the moment,” says Salwa Elbakry, business development director for Egis in Egypt.
“Several tenders were set to be issued in early January and February, but due to the current economic situation, including devaluation, there were some delays.”
This slowdown started in June, when the currency crises deepened. Companies remain optimistic, however, as “Egypt has proven to be a versatile economy”, says Elbakry. “There are a lot of positive outlooks for 2023. By the end of the first quarter or the beginning of the second quarter, things will get better.”
As Egypt’s major projects are backed by sovereign funds, international investors and institutions, it is “business as usual”, she adds.
Cairo’s positioning as a destination for international investment has grown in recent years. In 2021, Egypt’s International Cooperation Ministry secured $10.2bn in development financing, of which $8.7bn was dedicated to public sector projects and $1.5bn to private sector development.
GCC investors continue to believe in the Egyptian market as well. “The ties between the GCC and Egypt go way back,” says Elbakry.
Focus on key projects
While the IMF suggested in January that Egypt should curb its project spending, the government has said its major projects are vital for the country’s development and a vehicle for GDP growth.
Recently, Egyptian president Abdul Fattah al-Sisi pledged that national projects would continue. Ongoing infrastructure schemes include a high-speed railway network; roads and bridges; hospitals; and several new cities, including the $20bn new capital, to the east of Cairo.
“Egypt continues to be driving ahead with a lot of big projects,” says Raouf Ghali, CEO of Hill International. “It is the first time I have seen Egypt working on projects and programmes that rival the GCC, and this is very unusual.”
Other sectors that are expected to initiate new developments are tourism, healthcare and education, as well as logistics.
“This year will witness several public-private partnership schemes related to tourism, ports and industrial zones,” says Elbakry. “There is also a lot of buzz around the hospitality sector.”
Rail versus real estate
Railway projects make up $10.5bn, or 90 per cent, of the $11.7bn-worth of construction and transport projects in the bidding phase in Egypt.
The two largest upcoming projects are for work on the Cairo Metro: a $5bn Line 6 package and an $800m package for phase one of Line 4. Both schemes are in the bid evaluation phase.
Schemes on the Alexandria Metro are the next biggest pending awards. The National Authority for Tunnels is receiving bids for two $750m packages for the line between Abu Qir and Misr Station.
With the ongoing currency and inflation crisis, Egypt is trying to use more local resources and further reduce its imports of construction materials. The demand for foreign expertise remains strong in sectors such as rail, however.
“While the Egyptian market is rich in engineering and architectural skills, some projects like aviation, rail, ports, smart cities or water require international know-how,” says Elbakry.
The World Bank Group approved a further $400m in financing in 2022 to support railway network development in Alexandria and Cairo.
Real estate has been another booming sector in recent years, driven largely by domestic demand. Yet the outlook might be shifting now, with projects in the sector appearing to be scaling down and foreign funding showing signs of drying up.
“Egyptians rely on real estate as an investment,” says Elbakry, adding that the market is currently at a standstill because “the only people able to invest in real estate at the moment are high-income individuals”.
For the moment, “everybody is watching what the Central Bank is going to do with the currency and the exchange rate”, says Ghali.
“For construction companies, it is great to get these big contracts, but devaluations after signing contracts do not help profitability.
“It also creates a lot of insecurity because you have a lot of cash in the country that you cannot export, which makes it a very challenging environment,” he adds.
“Overall, we are bullish, but also very cautious because of the currency situation.”
MEED's March 2023 special report on Egypt also includes:
> GOVERNMENT & ECONOMY: Egypt faces up to economic reality
> POWER: Crisis dampens Egypt’s energy diversification
> WATER: Egypt turns to private sector for water
> BANKING: Interesting times for Egypt’s lenders
Exclusive from Meed
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Joint venture wins $246m RCRC bridges contract16 October 2026
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Humain tenders 100MW Riyadh AI data centre16 October 2026
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Adnoc Onshore seeks bids for Bu Hasa field EOR project16 October 2026
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OTTCO issues tender for Oman oil storage park expansion16 October 2026
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