A recent study has highlighted the benefits of offering land to investors on a usufruct basis.
Under the usufruct system, land is offered to investors for periods ranging from 40 to 100 years in exchange for annual fees, while ownership of the land remains with the state.
According to the study, produced by Abu Zaid Rageh, housing expert and member of the Specialized National Councils, the direct sale of land has several drawbacks.
Rageh's study concludes that land sales cause the prices of land to increase at a higher rate than increases in the prices of buildings. Additionally, the land is sometimes used for profiteering and, once sold, is often hard to change its use because of developmental and urban planning requirements.
According to the report, the usufruct system also upholds national security, and guarantees that land–especially that of a special nature like the Sinai Peninsula–will not fall into the hands of foreigners.
The study emphasizes that the usufruct system does not contradict the principles of the free market.
The study also cites recommendations made by the United Nations Conference on Human Settlements in Vancouver, 1976, which point out that land has a unique nature and a vital role for human settlements, and argues that land cannot be treated as a "normal" resource to be owned by individuals and subject to market pressures.
The conference also concluded that real estate ownership by individuals leads to the accumulation of wealth in the hands of a few and therefore disrupts social justice. The state has to monitor land usage in order to protect property, and land, it was stressed, is vital to the long-term objectives of the state.
In his study, Rageh points out that keeping land ownership nationalized preserves property for future generations and enables planning authorities to utilize it accordingly as new developmental needs arise.
Nationalization of land is also a guarantee that the land will not be used to serve exclusively one category of society at the expense of others. Additionally, offering land in exchange for an annual fee generates revenue for the state.
The study says conditions of usufruct arrangements vary from one country to another. Most countries, however, offer their land for periods ranging from 25-99 years. The type of activity planned for the land usually determines the specific period for each agreement, according to the study.
States almost unanimously agree that usufruct does not allow for the right to change the use of land following the agreement. In that event, there is the risk of losing the land.
According to the study, states differ on the fate of the buildings constructed after the determined period ends. While some say these become the property of the state, others argue the state should provide financial compensation for the buildings left behind.
The study also mentions that some countries have allowed foreigners to engage in the usufruct system, but typically impose restrictions. Limits for example are set on the area of land and the lease period.
Egyptian Civil Law organizes the usufruct system. Rageh’s study suggests, however, a need to set new rules in line with the nature of current development programs.
Deserts and coastal areas away from urban communities should be offered to developmental projects on a usufruct basis, the study says, and the lease period in this case should be between 40-100 years.
Translated from the Arabic Edition.
