New Decree on Allocation and Pricing of Industrial Lands

May 28, 2024

Highlights

On 21 May 2024, the Prime Minister issued decree no. 1670 of 2024 regarding the allocation and pricing of industrial lands (the “Decree”), as the validity period of the prices specified in the Prime Minister’s decree no. 3308 of 2022 (the “Previous Decree”) expired on 22 September 2023. The Decree sets forth the regulations governing the disposal of industrial lands through ownership or usufruct in accordance with the prices stipulated in the Decree itself. 

Furthermore, in contrast to the Previous Decree, this Decree details the payment mechanism for the land value.

Scope of Application

The Decree assigned to the committee established by virtue of the Prime Minister’s Decree No. 2067 of 2022 the power to allocate the industrial lands referred to in the Decree (the “Industrial Lands”) to investors, after they have fulfilled the required documents, in accordance with the following regulations:

A. Ownership:

  • The Industrial Lands shall be owned according to the prices set in the Decree. The land price can be paid through either of the following 2 (two) payment plans: (1) by paying a down payment of 25% (twenty-five per cent) of the land value, with the remaining value to be paid in 3 (three) equal annual instalments, plus an annual interest of 10% (ten per cent) (the “First Plan”); or (2) by paying a down payment of 10% (ten per cent) of the land value, with a grace period of 2 (two) years from the down payment date (the “Grace Period”), after which the remaining amount is to be paid in equal quarterly instalments over 4 (four) years, plus an annual interest of 10% (ten per cent) (the “Second Plan”).
  • Such payment plans are conditioned on completing the project within 3 (three) years of receiving the land for the First Plan, and within the aforementioned Grace Period regarding the Second Plan. Moreover, in the event of a delay in the payment of any instalment, interest    shall accrue from the payment due date to the actual payment date.
  • Additionally, the competent authority shall have the right to terminate the contract if two consecutive instalments of the Second Plan are unpaid.
  • Furthermore, those who have been allocated Industrial Lands under the First Plan and have paid 25% (twenty-five per cent) of the land value shall have the right to submit a request to the competent authority to pay the remaining land value in accordance with the Second Plan.

B. Usufruct:

  • The usufruct right shall be annual, with compensation determined at 5% (five per cent) of the ownership price, fixed for the first 4 (four) years. An annual cumulative increase is calculated at 7% (seven per cent) for the fifth and sixth years,increasing to 10% (ten per cent) annually for the remainder of the usufruct period.
  • The competent authority determines the usufruct period with a maximum duration of 50 (fifty) years, renewable under agreed-upon conditions, without prejudice to the competent authority’s right to amend the usufruct price upon renewal.
  • Any delay in payment of the usufruct price will result in the accrual of interest, according to the interest rate announced by the Central Bank of Egypt. In case of non-payment for 2 (two) consecutive instalments, the competent authority shall have the right to terminate the contract.
  • Upon the expiration of the usufruct period, the land and any facilities built thereon will be transferred to the competent authority.
  • The project must be operational within 3 (three) years of receiving the land. Failure to do so will result in the withdrawal of the land.

It is permitted for those who have been allocated Industrial Lands to transition from the usufruct system to the ownership system subject to certain conditions, including the elapse of at least 5 (five) years from the establishment of the project and full payment of the land’s price after reassessment at the full market price, deducting what has already been paid for the usufruct right. 

Finally, the prices stipulated in the Decree shall apply to contracts concluded within 1 (one) year from 23 September 2023. The prices specified in the Previous Decree shall continue to apply to allocations made prior to the enforcement of this Decree and to previous allocation requests submitted under the fifth investment map release, which have not yet been decided upon. 

Objectives

This Decree aims to facilitate the expansion of current industrial zones and the allocation of land for new projects across different governorates, thereby fostering investment and attracting investors.

It aligns with the government’s broader objectives to promote industrial ventures, enhance the investment environment, and offer additional incentives to attract domestic and foreign investments.

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