Valid remarks …
After talking with a friend, it also appears to me that an urban area seems a better fit for the first space in the MENA region. Not so much for the same reasons you mention (market access for products and services, mutual support), but for access to suppliers and service providers. For any project / startup involving physical products, access to more specialized products (with fast and comfortable international shipment if needed) and to services from more specialized workshops is important. Which needs (say) a city of ≥50,000 people with proper transport connections. Regarding market access to buyers, the option of exporting to Europe plus Internet marketing will suffice, given the right product. (We were talking of "innovative small machine" products like an open source optical coffee sorter or open source roaster.)
On the other hand, I'm still fond of the idea of working in the outback at some point (as in, Tarfaya for example): when we get a model that works there, we have proven it to be valid for everywhere else. Wouldn't mind staying for at least a year in a place like that.
(About the tools budget, the mentioned 3k EUR lower limit is fine for the start, and may come from saving in rent, "rent or make" style. 10-15k EUR is meant for a project beyond the current iteration, and would be baked into its budget.)