Cairo Real Estate Market Overview – Q2 2018

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Investor confidence boosted by strong performance across most sectors of the real estate market in Q2

The Cairo real estate market has remained relatively unchanged during Q2 2018, with sentiment and performance continuing to record improvements in most sectors. The hotel sector has seen the strongest improvement, with office and retail rents also increasing in some parts of the market. The residential market remains polarized, with increases in sale prices and declines in rental rates within most gated communities. According to Oxford Economics, Egypt’s GDP growth is expected to accelerate to 5.3% in the 2017/2018 fiscal year compared to 4.2% in the previous year. This accelerated growth is attributed to stronger industrial production, recovering tourism, and increased investment. Reforms to energy subsidies continue to create inflationary pressures but consumer price inflation (11.4% in May 2018) has fallen from the levels seen earlier in 2018.

Office

Sphinx International Airport is scheduled to commence operations in the second half of 2018, in association with the
opening of the Grand Egyptian Museum (GEM). While the main focus of the new airport will be leisure travelers, it will also service business travel and could generate additional demand for office space in 6th of October City.

Residential

The New Capital City continues to attract developers, who are recording positive sales performance for their announced projects. Construction within the New Capital is on a fast track, which increases investor confidence. In the latest sign of confidence in this market, Talaat Mostafa Group has launched ‘Celia New Capital a 2,000,000 sq m project within
the capital city’s Green River district, with delivery expected from 2022 onwards. This project incorporates smart home systems within both villas and apartments that are supported by ‘The Village’, a commercial and entertainment centre.

Retail

With e-commerce becoming a booming industry in Egypt, fashion retailers are increasingly incorporating Omni-channel retail strategies to expand their reach. While some retail categories are likely to require a physical store presence for the forseeable future, others are transforming into a more a virtual store concept. The increased use of technology has changed the shopping experience and presented new opportunities for retailers to capture a greater share of the potential demand.

Hotels

While no data has yet been released for 2018, arrivals are expected to increase in the second half of the year as the Ministry of Tourism continues to promote Egypt as a travel destination and restore one of the economy’s key revenue generating sectors, through campaigns such as “Egypt – Experience Invest”, launched at the FIFA world cup in Russia. Improved security measures have resulted in flights to Italy, Russia, and the UK being resumed. Egypt has emerged as a price competitive destination and is seeking to increase the demand for multi destination trips combining beach tourism (Red Sea and North Coast resorts), with cultural and historic tourism (Cairo and the Nile Valley).

With the opening of the Grand Egyptian Museum (GEM) and the new Sphinx International Airport within close vicinity to the Pyramids of Giza, later in 2018, more tourists are expected to include Cairo in their travel itineraries.

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Ayman Sami

Author: Ayman Sami

As Head of JLL’s Egypt office Ayman oversees the delivery of all services including development consulting, property management, real estate research, retail and office leasing, capital markets and valuation services, to ensure that the highest level of local and international expertise is being used.

Prior to joining JLL, Ayman has worked on projects in Egypt in the areas of real estate development, land and asset valuations, as well as market research and analysis for major establishments. He holds a Bachelor of Science Degree in Marketing Management from The American College of Greece – Athens, Greece.

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