112
World Bank Working Paper
Sector Background and Energy Implications Urban Population and Construction Patterns and Trends About two thirds of Egypt’s total population of 73 million (2005) are living in urban areas (that is, settlements with more than 10,000 inhabitants). Using the official Egyptian definition, which excludes urbanized rural areas, the share would be only 43 percent. By 2030, Egypt’s population is expected to reach over 104 million (see table A2.1).2 Egypt’s population is concentrated in only 5.5 percent of the territory. About 30 percent live in the two biggest cities, Cairo and Alexandria, a total of about 65 percent in Cairo and the Nile delta. The Egyptian building stock comprises about 11.5 million buildings. 60 percent of building units are in the residential sector. Expenditures in the construction sector is expected to increase by about 3 to 4 percent annually between 2005 and 2015, slightly less than in the immediate past. Table A2.1. Building Stock in Egypt, 2006 and 2030 Projection Buildings (million) 2006/2030
Units (million) 2006/2030
Residential
n.a.
16.5/22.8
Nonresidential
n.a.
11.3/16.0
11.5/16.0
27.8/38.8
Source: Mosallam/Miraj (2009). Note: 2006 data are based on Saleh (2008); 2030 Projection is based on population growth between 2006 and 2030 and corresponding linear expansion of each category of housing stock during this period. Data are from "Egyptian Population Per Year Over Selected Years", Population Division of the Department of Economic and Social Affairs of the United Nations Secretariat, World Population Prospects: The 2008 Revision.
Supply and demand of urban housing is mismatched. The number of housing units in urban areas reached about 9.5 million units, whereas the number of urban households is estimated at only about 6.8 million units. A significant number of units are vacant. At the same time, there is a significant shortage of housing units not only for low-income but also for middle-income households. It is estimated that “around 175,000 to 200,000 new housing units3 are needed annually to keep pace with household formation, but that only the top 10 to 20 percent of the income distribution can afford to acquire a formal sector house.”4 One of the main reasons for the nonaffordability of formal housing is the lack of mortgage lending, which, in turn, is caused by inadequate legal infrastructure; high registration fees, taxes and inefficient property registration procedures; restrictions on bank credit to the housing sector; lack of risk information for lenders; and inconsistent approach to property valuations.5 As a result, a large share of residential (and commercial) construction takes place in the informal sector. Of Egypt’s urban population, 40 to 50 percent is estimated to live in informal settlements and squatter areas. “The informality label characterizes housing built in violation of existing urban planning legislation and the building code, often by converting (legally owned) agricultural land to urban uses without land subdivision or building permits, and in almost all cases without registered property titles (whether legally owned land and property or squatter).”6