In the whirlwind of money, land and new housing developments, it was easy last year to get caught up in Egypt’s three-year-old real-estate boom. The momentum continued in 2006 with soaring prices and foreigners joining Egyptians looking to invest in new developments on the outskirts of Cairo as well as popular tourist destinations like the North Coast and the Red Sea.

Properties in prime locations in the capital city and on the coast appreciated by as much as 60 last year, and some new developments didn’t even require advertising: Buyers were practically waiting in line to reserve property in compounds whose designs they hadn’t even seen. Some analysts have cautioned that a real estate bubble is building, warning that there is a glut of stock and that prices are starting to lose touch with reality. Others, however, point to prices and market dynamics in Dubai and claim that the bubble is far from bursting.

Luxurious residential compounds including the second phases of Qatameya Heights (Qatameya Dunes) and the popular Sixth of October developments Gardenia and Palm Hills — expanded to New Cairo last year with the hope of capitalizing on growing demand for residential property. Also launched in 2006 was Talaat Moustafa Group (TMG)’s second megaproject, Madinaty. After the success of the group’s Rehab City, located in the extension to New Cairo at kilometer 33 on the Cairo-Suez road, TMG acquired 8,000 feddans adjacent to Rehab for the Madinaty project. The new community, which has been designed by three American urban-planning firms, will include residential villas, townhouses and apartments, as well as recreational and commercial areas, schools, medical facilities and hotels. A city in itself, Madinaty will accommodate 80,000 residential units, supporting an estimated population of 600,000. Madinaty’s extensive media and marketing campaign, which began last Ramadan, has already had a dramatic effect on the market.

According to real-estate brokers who are active in the area, the price of land in the nearby suburb of Shorouq City tripled during the second half of the year, largely because of Madinaty. Shorouq, which was one of the first urban communities to be developed by the government in the late 1980s, had failed to grow as expected because of the lack of services available in the area. The growing interest of foreign real-estate developers, particularly those from the Gulf, also became obvious in 2006. Last summer, Emaar, the Dubai-based real-estate giant with an ever-expanding regional and international presence, paid $175 million at auction for seafront resort land at Sidi Abdel Rahman on the North Coast, with seven kilometers of pristine coastline that used to belong to the state-owned Egyptian General Company for Tourism and Hotels.

Emaar is already hard at work developing and marketing its new year-round tourist destination in Sidi Abdel Rahman, to be known as Marassi. The new resort will include several hotels, including a revamped version of the historic Sidi Abdel Rahman Hotel, as well as luxury villas, chalets, a marina and an 18-hole golf course. The project is expected to be complete in five years. At a lavish event held in Cairo last October, Emaar invited a select group of potential buyers and offered them special deals if they purchased property in two or more of Emaar’s Egyptian developments, which also include the heavily advertised Uptown Cairo, a 4 million-square-meter luxury compound in the Moqattam hills. Emaar describes the $14 billion Uptown Cairo as “a mixed-use development that integrates residential, commercial and leisure components in a stylish environment.” Emaar is simultaneously developing a third gated community adjacent to Cairo’s Smart Village. Following in the footsteps of Emaar, DAMAC — one of the Middle East’s largest luxury property developers, well-known for its Dubai towers — made its debut on the Egyptian market in 2006. With Prime Minister Ahmed Nazif and the ministers of tourism, finance and transportation on hand, DAMAC inked a deal to develop a 320 million-square-meter tourism project in Gamsha Bay, 60 kilometers north of Hurghada. The project, which is being billed as a “township” along the lines of El-Gouna and Kharafi Group’s Port Ghalib in Marsa Allam, will be completed in phases over the course of 10 years. In a statement to press announcing the launch of the Gamsha Bay project, DAMAC Chairman Hussain Sajwani said, “We are delighted to enter this exciting new market. Gamsha Bay, with its environmentally conscious design and its innovative architecture, will surely set a benchmark for the real-estate marketplace in the region and will further influence economic development. Then, of course, there is Serrenia, which falls squarely into a category of its own. How many other developments do you know that bill themselves as The World’s Most Exclusive Waterside Address, let alone note that Cairo is only two hours away by helicopter? The real-estate sector’s final surprise of the year was the announcement of a full merger between SODIC, one of Egypt’s largest real-estate developers, and Palm Hills, the Al-Mansour and Al-Maghraby Investment and Development-owned group with properties in Sheikh Zeyed City, Sixth of October City and New Cairo. Company officials say SODIC will purchase 100% of Palm Hills and swap Al-Mansour and Al-Maghraby equity in the merged entity in return. The move to consolidate came as a direct response to the growing competition posed by international developers who have recently begun to invest in the Egyptian market. Speaking on the sidelines of Cityscape, a real-estate exhibition held in Dubai last December, Maher Maksoud, SODIC’s new CEO and managing director, said he was attending to introduce SODIC as the most progressive developer and the Egyptian real-estate sector as the most exciting in the region. SODIC, which underwent a full corporate restructuring in 2005 and an LE 1.2 billion capital increase at the end of 2006, says it is now ready to compete not just domestically, but in the region as well.