Downtown's long makeover
The Boursa Exchange recently had a good roundup of news on the purchase of some of Downtown Cairo's historic buildings. I thought I'd point out the long story by Shaimaa Fayed in Business Monthly on this issue, from the real estate business angle:
The idea of taking old buildings and refurbishing them has been done everywhere, from Paris and Rome to Istanbul,” says Karim Shafei, chairman and CEO of Al Ismaelia for Real Estate Investments. He explains that the company’s project was one that quickly drew in investors, all of whom foresaw sizeable economic potential in restoring the downtown area. However, the details of the venture have yet to be ironed out. “This is a very dynamic project,” says Shafei. “We didn’t calculate the projected returns. It’s not that we don’t see that there’s going to be significant returns; but it’s very difficult to quantify something that is so dynamic and that will also take place in the distant future.”
The company has already acquired 11 buildings, including the one housing the popular Café Riche in Hoda Shaarawy street, purchased for LE 9.5 million, and the Davies Bryan building, with entrances on Abdel Khaleq Tharwat, Mohamed Farid and Adly streets, purchased for LE 32 million. It hopes to purchase properties clustered in close proximity. Possible options for re-use of the buildings following their restoration, which Shafei anticipates will be completed over 10-15 years, run the gamut from boutique hotels to office buildings, residences and malls. While the company hopes to acquire one million square meters, Shafei says that the project can become profitable once 300,000-400,000 square meters are purchased.
Currently, around half of downtown’s buildings are owned by public sector insurance companies, the remainder by private owners. Among the latter, many are frustrated by antiquated rental laws that prevent them from raising their leasing prices. All leasing contracts in Egypt signed prior to 1996 fall under the old rental law, which forbids rent hikes to protect the interests of lower-income residents.
Owners were glad to find investors that would purchase their buildings, explains Shafei. In many cases, he says, “they come to us, we don’t go to them. Tenants want to leave because either they have left their apartments closed for ages, or they don’t like downtown. They don’t want to be living here. The buildings are in a miserable state.” In the case of occupied buildings, Al Ismaelia for Real Estate Investments is negotiating with tenants wishing to give up their rent contracts in exchange for financial compensation, a proposition that has been met with mixed sentiments. The company has taken the same approach with the stores in the area, offering to buy their properties or asking them to comply with storefront alterations that conform to the architectural design of the buildings.
For Downtown Cairo lovers, the issue will be (I expect sooner than most expect, perhaps within 10 years) whether the new buildings will be priced out of the normal neighborhood inhabitants' income (likely), whether the arrival of new stores to cater to this niche part of the elite will arrive (eventually, but don't hold your breath) and whether a spic-and-span, Solidere like Downtown is a desirable thing.
On that last question, while some charm and roguishness may inevitably be lost, I think it might be made to work. Beirut's Solidere is quite physically isolated from other neighborhoods, this gives it a kind of amusement park feel. Cairo's Downtown has no such easy divides, and the complicated laws and regulations for the purchase of buildings makes it unlikely that a large enough area will be acquired for that amusement park feel. So instead we may just get a small high-class neighborhood in the pedestrian Bursa area, perhaps for those too hip for Qatamiya or those who want a pied-a-terre in central Cairo before heading for the burbs on the weekends.