So why is Egypt building a new capital city right next to Cairo?

A model of the proposed city (we're assuming the web address won't loom quite so large on the finished article). Image: Getty.

According to the highly reliable source that is Wikipedia, Egypt has had 29 capital cities over the past 5,000 years. The incumbent, Cairo, has been in place since 950 AD, so, in the scheme of things, it was due a change-up. 

Perhaps that's why, last week at an economic development conference, the Egyptian government announced it was planning a giant new building project to the east of Cairo. The new city, which could eventually cover 700 km sq, doesn't currently have a name, and is being referred to simply as "The Capital" (we're really hoping this is a Hunger Games reference).

If all goes to plan, the city will serve as the new administrative and financial capital of Egypt. Amazingly, the ministry claims that development could be finished within five to seven years, and construction on the road that will link the two cities has already begun. 

You could be forgiven for being a little confused as to why a country would shift its capital of over a thousand years 50km to the east, seemingly for the hell of it. Here are a few reasons the project looks so appealing to the Egyptian government . 

Cairo is full

The population of Cairo's larger metropolitan area is nearing 20m, and, as a result, it's one of the most congested cities on earth: the World Bank estimated in 2010 that traffic costs amount to about 4 per cent of Egypt's entire GDP

In this sense, the new development could be seen as an extension of the old city, to cut down on overpopulation and congestion. The housing ministry claims the capital could house up to 7m people; the initial plans include 1.1m residences, 1,250 mosques and churches, and 663 hospitals. That said, "New Cairo", a relatively new development to the east, was built for millions of residents, but is still only home to a few hundred thousand.

Still, Cairo's population is expected to double over the next 40 years, so a new satellite city does make some kind of sense. But why move the country's capital too? 

The president wants to make a statement

Abdel Fattah el-Sisi was elected president in June 2014, and subsequently told the Egyptian people to prepare for the "hard work phase" in their country's recent history, to help the country's economy recover from the effects of the 2011 revolution. That revolution played out in old Cairo, and centred on Tahrir square, the site of many of Cairo's current administrative buildings. 

Mubarak, Egyptian president between 1981 and 2011, actually tried to build a new capital too during his own tenure, but that project failed. If Sisi can succeed, and physically move the government away from the ghosts of the revolution to boot, it'll show he can overcome Egypt's previous setbacks and political tensions and move the country – and, hopefully, its economy – forward. 

Image: Getty.

The Egyptian governemnt may not have to pay for it

The government has hired a Dubai-based real estate investment fund, headed by Emirati Mohamed Alabbar, the man behind the Burj Khalifa, to raise funds for the project and build it. By the end of last week's conference, around $12bn had been pledged by Gulf-based investors, which is over a quarter of the total (that's if the project stays within budget, of course).

The Egyptian people must be hoping for big foreign investment, too: Sisi has already cut food and energy subsidies and raised fuel prices to help the country's ailing economy, which has led some to criticise the announcement of a grand new city project while Egypt's poorest go hungry. 

The Suez canal is getting wider

Another important factor is the city's location: it will lie between Cairo and the Suez Canal, with its profitable trade routes. Under a new expansion project, the Egyptian government is expanding the canal, to allow boats to sail in both directions at once (it goes both directions at the moment, but along most of its length its only wide enough to go one way at once), potentially doubling the trade revenue generated. 

Here's the planned location, a short hop from both New Cairo and El Shorouk city (the two blobs just to the north of the new capital). 

This will bring the city much closer to the canal,  using up what is at present just a stretch of desert: 

It's been done before

...though not particularly successfully. Malaysia moved parts of its central governemnt from Kuala Lumpur to the newly built Putrahaya in 1999, while in 2005 the Burmese government shifted from Yangon to the brand new city of Naypyidaw (though that city is reportedly still half empty). Egypt, meanwhile, has built over 20 "new towns" over the past half century, most of which are still very sparsely populated. Looks like President Sisi has a real job on his hands. 

 
 
 
 

Businesses need less office and retail space than ever. So what does this mean for cities?

Boarded up shops in Quebec City. Image: Getty.

As policymakers develop scenarios for Brexit, researchers speculate about its impact on knowledge-intensive business services. There is some suggestion that higher performing cities and regions will face significant structural changes.

Financial services in particular are expected to face up to £38bn in losses, putting over 65,000 jobs at risk. London is likely to see the back of large finance firms – or at least, sizable components of them – as they seek alternatives for their office functions. Indeed, Goldman Sachs has informed its employees of impending relocation, JP Morgan has purchased office space in Dublin’s docklands, and banks are considering geographical dispersion rather concentration at a specific location.

Depending on the type of business, some high-order service firms will behave differently. After all, depreciation of sterling against the euro can be an opportunity for firms seeking to take advantage of London’s relative affordability and its highly qualified labour. Still, it is difficult to predict how knowledge-intensive sectors will behave in aggregate.

Strategies other than relocation are feasible. Faced with economic uncertainty, knowledge-intensive businesses in the UK may accelerate the current trend of reducing office space, of encouraging employees to work from a variety of locations, and of employing them on short-term contracts or project-based work. Although this type of work arrangement has been steadily rising, it is only now beginning to affect the core workforce.

In Canada – also facing uncertainty as NAFTA is up-ended – companies are digitising work processes and virtualising workspace. The benefits are threefold: shifting to flexible workspaces can reduce real-estate costs; be attractive to millennial workers who balk at sitting in an office all day; and reduces tension between contractual and permanent staff, since the distinction cannot be read off their location in an office. While in Canada these shifts are usually portrayed as positive, a mark of keeping up with the times, the same changes can also reflect a grimmer reality.  

These changes have been made possible by the rise in mobile communication technologies. Whereas physical presence in an office has historically been key to communication, coordination and team monitoring, these ends can now be achieved without real-estate. Of course, offices – now places to meet rather than places to perform the substance of consulting, writing and analysing – remain necessary. But they can be down-sized, with workers performing many tasks at home, in cafés, in co-working spaces or on the move. This shifts the cost of workspace from employer to employee, without affecting the capacity to oversee, access information, communicate and coordinate.

What does this mean for UK cities? The extent to which such structural shifts could be beneficial or detrimental is dependent upon the ability of local governments to manage the situation.


This entails understanding the changes companies are making and thinking through their consequences: it is still assumed, by planners and in many urban bylaws and regulations, that buildings have specific uses, that economic activity occurs in specific neighbourhoods and clusters, and that this can be understood and regulated. But as increasing numbers of workers perform their economic activities across the city and along its transport networks, new concepts are needed to understand how the economy permeates cities, how ubiquitous economic activity can be coordinated with other city functions, such as housing, public space, transport, entertainment, and culture; and, crucially, how it can translate into revenue for local governments, who by-and-large rely on property taxes.

It’s worth noting that changes in the role of real-estate are also endemic in the retail sector, as shopping shifts on-line, and as many physical stores downsize or close. While top flight office and retail space may remain attractive as a symbolic façade, the ensuing surplus of Class B (older, less well located) facilities may kill off town-centres.

On the other hand, it could provide new settings within which artists and creators, evicted from their decaying nineteenth century industrial spaces (now transformed into expensive lofts), can engage in their imaginative and innovative pursuits. Other types of creative and knowledge work can also be encouraged to use this space collectively to counter isolation and precarity as they move from project to project.

Planners and policymakers should take stock of these changes – not merely reacting to them as they arise, but rethinking the assumptions that govern how they believe economic activity interacts with, and shapes, cities. Brexit and other fomenters of economic uncertainty exacerbate these trends, which reduce fixed costs for employers, but which also shift costs and uncertainty on to employees and cities.

But those who manage and study cities need to think through what these changes will mean for urban spaces. As the display, coordination and supervision functions enabled by real-estate – and, by extension, by city neighbourhoods – Increasingly transfer on-line, it’s worth asking: what roles do fixed locations now play in the knowledge economy?

Filipa Pajević is a PhD student at the School of Urban Planning, McGill University, researching the spatial underpinnings of mobile knowledge. She tweets as @filipouris. Richard Shearmur is currently director of the School, and has published extensively on the geography of innovation and on location in the urban economy.