The role of the state in managing urban land supply and prices in Egypt

Abstract

This paper examines the role of the State in managing urban land supply and prices with reference to the residential urban areas and urban housing in Egypt. The ways by which the State and local municipalities seek to regulate the supply of land for urban development and to generate revenue are examined. The paper explores the market forces and state policies that determine the equilibrium land and housing values and land use patterns. The key issues that affect land management, supply and prices are urban land policies, institutional frameworks and regulations. Therefore, this paper focuses on studying the impacts of the State intervention on land markets—through urban land policies—on land tenure, delivery and supply systems and land prices. Land, in Egypt, is supplied in a dual market by both public and private (formal and informal) sectors. Factors that affect land supply and prices include: political choices, free market forces, land use planning, control and production. In this paper, the State intervention in the land market—through public policies—were analysed and its impacts on both private and public land prices were assessed. The analysis undertaken in this paper suggests that both urban land policies and abnormal market factors—i.e. inelastic demand and supply—impact, directly, land prices. Determinants of land prices for the publicly supplied land are political choices, cost-recovery and generating maximum revenue. For the privately supplied land, land prices are determined by proximity, location and “potential” productivity. The escalation of land prices in Egypt could be explained by factors such as inelastic demand for land, uncertainty, speculation, price inflation, and disparity of income distribution. This paper concludes that modification of current urban land policies and state intervention in the land and housing markets is urgently required. Such an intervention requires a clear conception of land management, supply and delivery systems taking into account the main constraints affecting the quantity and price of land. The aim of the proposed intervention is to restore a market process that in turn may impact the evolution of a normal land market in Egypt.