Land Use Incentives for Real Estate Developers in Social Rental Housing Projects (Case study: Degla Gardens Project-October Gardens-Six October City)

Abstract

Social rental housing projects have emerged since 2016 to cover the housing demand of low-income groups, but these projects need high cost that beyond the financial capacity of some governments. Therefore, the World Bank reports in 2014 and 2018 pointed to the importance of including the private sector in low-income housing projects as a real estate developer instead of the state. The contribution of private sector and his successful experience in this field help in reducing the government spending towards these projects and achieving high quality in their implementation. For these reasons, many countries at international level involved the private sector in construction of social housing units in exchange for a set of incentives, which vary widely from one country to another. These incentives are classified into two main groups, the first one is financial and administrative incentives such as providing free land or selling it at low price, besides taxes and financing facilities as applied in Brazil, China, Singapore and Thailand. The second group is new incentives which called Land use incentives such as land use kind, percentage of land exploitation, proposed density and land use regulation in the housing project as applied in the United States, Japan and France because the previous financing incentives are not enough to achieve an appropriate profit for investors.

At the local level, the private sector participated in many low-income housing projects such as Youth Housing, National Housing and social housing projects during the period from 1996 until now. In which the Egyptian government provided him some incentives like low price land, payment facilities, tax cuts and allocation part of land for his investment projects in exchange for building number of housing units with an area of (63 m²) for low-income groups. On the other hand, real estate companies retreated from participation in these projects because the incentives are unsatisfactory to them, which made the state played again the role of real estate developer to fill the gap in housing demand by using insufficient government budget.

As a result of that, the Egyptian government is trying nowadays to re-engage the private sector again in future social housing projects by studying all submitted proposals from private sector in 2016, the World Bank in 2018 and the views of some institutions such as ministry of investment, ministry of housing and the Social Housing Fund in 2019 around the new incentives, especially after the state decided to withdraw from real estate development and leave it to the private sector by the year 2020. Hence, this paper tries to introduce the new incentives for private sector to participate again in social housing projects. The formulation of these incentives comes from revision the international experiences and reports as well as evaluating the applying of old incentives in one case study of participation housing projects (Degla Gardens project to find an integrated vision for suitable incentives in Egyptian reality that achieve the goals of all development parties ( the government-private sector-population).