Why is Egypt building a new capital?

According to estimates, more than 21 million people live in Cairo.

The government and President Abd al-Fattah as-Sisi have decided to rebuild Cairo. To this end, for example, the first houseboats, which were typical for Cairo, are currently disappearing. No small boats, full two, rarely even three stories. The city, which has grown over thousands of years, will never again exist as it is today.

As reported by Wirtschaftswoche, “with strong help from China”. The first construction work began in 2015.

But, why is Egypt planning to build a new capital?

The population here will double in the next 40 years. There are currently 21 million people in the metropolitan region, and in the future there will be up to 40 million. The city is designed to address Egypt’s various problems while offering a special quality of life.

We connected the new capital through:

• Airport: “New Capital Airport
• Streets: Suez Road and Mohamed Bin Zayed Axis

What is the name of the new capital of Egypt?

So far, the new capital has no name. It is still referred to as the “New Administrative Capital.

When the capital is finished, it will be reminiscent of mega-cities like (here) Dubai.

Live view from space

Here are the latest available satellite images from Google Maps.

View of the construction area:

Emergence in the desert: construction site XXL

Construction started in the middle of the desert in 2015. Since then, the city is rapidly taking shape and features.

Before / After: Skyscrapers in the sand

This gigantic megaproject in Egypt costs a whole 58 billion dollars.

Overview of prefabricated house

• More cost-effective alternative to solid construction
• Short construction time
• From 125.000€
• Limited creativity and individuality in house building
• High costs are incurred in the event of deviation
• Lower sound insulation and thermal insulation compared to the solid house
• Manufacturers offer show houses for viewing

Amazing – See how the construction of a prefabricated house proceeds in fast motion!

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Definition: What exactly does smart building technology include?

Smart building technology (also known as Smart Building or Smart Home) refers to the electronically networked control of all technical trades of a property via a central platform. The systems range from simple radio solutions to KNX-based bus systems that are integrated into the electrical installation and make the property technically future-proof for 15–20 years.

• Heating & Climate — Room-specific control, heat pump control
• Lighting — Presence, daylight and scene control
• Shading — Blinds, shutters, awnings weather-dependent
• Security — Access, alarm, video surveillance, water detectors
• Energy — PV, storage, wallbox, load management
• Comfort — Multimedia, voice control, scenes

For investors: Smart home components are not just a comfort investment, but directly affect the energy efficiency class, rentability and thus the market value. Anyone acquiring a property should include the Rating of the technology in the property valuation logic.

Investment costs: What does a smart home upgrade really cost?

The cost spread is enormous — and this is exactly where the leverage lies. A retrofitted radio solution in an 80-m² apartment starts at 2,500 €, while a fully integrated KNX system in a new-build villa can exceed 80,000 €. For the investment calculation, the additional cost per m² that you have to add to the purchase price or construction costs is relevant.

Before every decision, it’s worth looking at the calculate purchase ancillary costs section, because smart retrofits are already recognized as value-enhancing in many bank loan approvals today — which positively influences your calculate equity requirement value.

Return calculation: Three scenarios for investors

What matters is not the premium, but what it brings you. We compare a classic apartment building (8 apartments, 600 m² living space, purchase price 1.8 million €) without, with comfort and with premium smart home equipment.

The gross yield only shifts marginally — the real lever is in the value increase and the security of rental income. Detailed calculations are provided by the Calculate Gross Yield calculator; for a reliable current view, I also recommend using the Cash Flow Calculator, which realistically reflects amortization, interest and management costs.

Tax Treatment: Depreciation, Maintenance Costs or Construction Costs?

This is where it gets legally tricky for rental investors — the classification determines whether you can deduct your smart home investment immediately or over 50 years. The tax office strictly distinguishes between three categories, regulated in § 6 EStG, § 7 EStG (depreciation) and § 255 HGB:

• Maintenance costs (§ 21 EStG) — fully deductible immediately
• Purchase-related expenses (§ 6 Abs. 1 No. 1a EStG) — depreciated over time if more than 15 % of the purchase price within 3 years
• Construction costs — standard depreciation → 2 % or 3 %
• Movable assets (§ 7 EStG) — own useful life, often 5–10 years

Concretely, this means: If you replace only one heating thermostat with a smart model, it is considered maintenance cost. However, if you install a fully networked KNX system with new wiring as part of a renovation within the first three years after purchase, you will regularly fall below the 15% threshold of the acquisition-related costs — and must amortize the remaining useful life. As described in the guide Real Estate as an Investment, you should consciously schedule the renovation phase for the fourth year after purchase to ensure the full tax effect.

Funding: How banks assess smart real estate

Since the EU Taxonomy and the tightening of the KfW funding framework in 2023/2024, efficiency criteria are directly included in the lending decision. Anyone presenting a property with energy efficiency class A or B — which is realistically achievable with intelligent building technology — receives interest rate reductions of 0.10–0.30 percentage points compared to class D properties at many banks.

With a loan of 1.5 million € and a repayment period of 20 years, the interest savings alone amount to 30,000–90,000 €. In addition, KfW repayment grants of up to 45,000 € per residential unit (Program 261/262) apply. The aspect of mortgage repayment planning thus gains an additional dimension. Anyone who is setting up real estate financing anyway should integrate the smart home portion from the beginning into the collateral documents.

Capital gains tax & exit: Smart technology when selling

When selling within the ten-year speculation period (§ 23 EStG), the smart home investments are counted as value-enhancing in the acquisition/production cost block. This reduces the taxable gain on disposal. Example: You have invested 35,000 € in premium technology and sell after eight years with a book profit of 280,000 €. With a personal tax rate of 42%, the allocation reduces your tax burden by around 14,700 €.

Before each exit, it’s worth checking the speculation tax calculator as well as comparing valuation methods — a modern smart building is systematically valued higher using the income capitalization approach than with the classical asset-based valuation method, because the sustainable rental income increases the multiplier.

Decision aid: Is smart technology worth it for your investment?

The honest answer is: not always. The following heuristic has proven itself in practice and replaces a formal decision tree:

• Location A+ (Munich, Hamburg) — Premium upgrade is almost always worthwhile
• Location B (medium-sized cities) — Comfort level is usually optimal
• Location C (periphery) — only basic smart, otherwise overinvestment
• Holding period < 5 years — only maintenance measures
• Holding period > 10 years — full KNX upgrade economically sensible
• New construction — always plan for smart-ready wiring

For the initial investment in this field, I recommend fully equipping a single property — ideally the pilot project — and measuring the results over two rental cycles. Those investing for the first time will find concrete step-by-step guidance in our guide to buying your first property. Those looking to scale should take the leap to buying an apartment building — there, the smart-building leverage per invested euro is the greatest.

FAQ — Frequently asked questions from investors

How does intelligent building technology affect the market value?

Current market analyses show premiums of 5–12 % compared to similar properties without smart fittings, up to 15 % in premium locations. However, the quality of integration is crucial: an outdated island solution system can even reduce value, as buyers may factor in a potential dismantling. Therefore, invest in open, standardized systems such as KNX, Matter or ZigBee 3.0, which will still be supported in ten years’ time.

Can I pass on Smart-Home costs as a landlord?

Pure investment costs are not passable on to tenants, but ongoing maintenance and service costs of the system according to § 2 BetrKV can be, provided this is explicitly regulated in the rental agreement. Modernizations according to § 559 BGB also allow for a rent increase of 8 % of the costs incurred per year — for a 20,000 € Smart-Home investment this would be 1,600 € annually, distributed across the affected residential units. This must be formally announced and justified.

Which Smart-Home investment is the biggest return driver?

From an investor’s perspective, clearly the combination of individual room heating control, photovoltaics with battery storage, and intelligent wallbox. This combination reduces additional costs by 25–40 %, qualifies for KfW funding, and often moves the energy efficiency class up by two levels. The payback period typically lies between six and nine years at current energy prices — with a remaining useful life of the technology of 15–20 years, this is clearly a positive business.

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Building plot at a glance: Buildable plot

• Construction-free area
• Must be structurally usable according to public law regulations
• Must be defined as a building area in the development plan
• Must be located in the inner area of a district
• The immediate surroundings must permit development

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