Iran and Egypt Infrastructure Market Analysis and Forecasts in New Research Report at

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Iran’s construction industry with a negative forecast of -3% for 2013 due to the persistently high inflation – estimated above 20% between 2013 and 2017 – and continued pressure on Iranian finances following the latest wave of US and EU energy sanctions. Expected this downward pressure in Iran construction industry to continue largely unhampered until 2015, after which anticipate a gradual easing and an average annual growth of around 2.1% between 2016 and 2021. However, Iran’s business environment remains opaque and difficult to penetrate for any outside investors. China and Russia are, by and large, the only two countries with a continued international presence, yet even this relationship is currently experiencing setbacks.

The Chinese government has made an offer to build a new freight rail line in Iran, according to
Engineering News-Record. The freight line is aimed at allowing continuous rail transport of goods from China, through the Middle East, to Europe. The project is expected to cost US$2bn, starting in Tehran and running to Khosravi on the Iraqi border. Iran’s minister responsible for transport is reported to have invited bids to construct the line. That said, are seeing some setbacks within the China – Iran relationship, when the former recently pulled out of the development of phase 11 of the US$4.7bn South Pars gas field, as well as the US$2bn, 1,500MW, hydro-dam project in Bakhtiari. As a result now question the viability of the planned US$1.5bn Iran to Pakistan pipeline, which is unlikely to be built
without significant Chinese backing.

  •     The North-South Rail Corridor, an ambitious project to create a freight-rail link between Europe, via Russia and Azerbaijan, through Iran and eventually linking to India and Southeast Asia, took a step forward in October 2012 with the unveiling of a cooperation agreement between transport ministry representatives from Russia, Azerbaijan and Iran.
  •     Iran launched the Bushehr nuclear power plant during a ceremony held on September 12 2011. The 1,000 megawatt (MW) plant will undergo several test stages before becoming fully

operational, reports the IRNA news agency. The west has opposed any such developments,
claiming that the Iranian nuclear programme is a cover for the development of atomic weapons.

  •     Iran’s Ministry of Housing and Urban Development has confirmed that contracts have been

agreed with construction firms for work on the Mehr Housing Scheme, according to AMEinfo.
The scheme will see the construction of 430,000 urban residential units before March 2013. The
deals in place relate to 260,000 of the residential units, with arrangements for the rest yet to be

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Egypt Construction industry activity has suffered throughout 2012, in line with our expectations, and expect the industry to face continued challenges in the months ahead. Q112 data revealed that the construction sector underwent a 9.4% year-on-year (y-o-y) contraction and overall estimate that sector contracted by around 6.0% in 2012.

Key trends and developments in the sector:

  •     In November, the European Investment Bank (EIB) approved a EUR600mn loan for the Cairo

Metro-Line 3 project and has released the first EUR200mn tranche. The loan is for the third
phase of the Line 3 construction, extending the existing line by 17.7km, which will include 15
new stations. The first phase of the east-west metro line was inaugurated in February 2012,
running 4.2km, from Attaba to Abbasia in eastern Cairo. The second phase is under construction
and due to be completed by 2014, and the third phase is in the design stage. The loan is for an
extension that will take the line under the Nile to the western sections of Cairo.

  •     In terms of aid, Egypt has been the beneficiary of a significant amount of Gulf Cooperation

Council (GCC) funds since last year’s revolution. Egypt has recently received more than US$5bn
in loans and grants, including US$2bn from Qatar, and loans from Saudi Arabia and the Islamic
Development Bank. Representing the widening fiscal deficit and the rising costs of servicing
debt, Cairo has also recently requested for $4.8 billion in emergency funding from the
International Monetary Fund (IMF), and officials in the US have noted that the Obama
administration is close to providing US$1bn in debt relief – at the same time, 50 U.S.
corporations visited Egypt to explore investment opportunities and more.

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Priyank Tiwari
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