Economy of Cairo – The Start Of A New Economic Cycle

No Comments

This post is also available in: العربية (Arabic)

Economy of Cairo starts a new cycle

At the end of Eid the economy of Cairo marks the start of an unofficial economic cycle. Developers, which had concentrated on entertainment during the summer months, will now be turning their attention to the resurgence of the business mindset as the city’s population returns to work.

There will be an immediate boost in retail sales as the back to school market peaks, and with attractive initiatives from the government, I expect to see businesses expanding or new business entering Cairo before the year end. This positive momentum will likely create demand for office space in and around the city’s business districts.

Continuing economic growth

Egypt Travel Market has benefitted from tremendous growth so far during 2017 . This article states that growth for the first seven months of the year was 170% – a figure qualified by 4.3m tourists, 75% of which have been reported to be from Europe. Egypt is yet to recover pre-2011 tourism figures but growth is good news and adds to the general mood of the economy. When we consider Cairo is relatively inexpensive as a major global city, its appeal to business will probably keep the hotel industry busy as the end of the year approaches.

In terms of the residential market, the shift toward Cairo’s outer regions will continue as existing neighbourhoods become less sustainable. However, this move will create demand within the secondary market for those looking for smaller properties, particularly with those looking for residence close to the city centre.

With all of this good news we may be forgiven for thinking the economy of Cairo is set for a very rosy future, but there is one real estate sector that requires attention – the healthcare sector.

Nearly 3,000 hospitals needed by 2022

As economic uncertainty and volatility has hit our markets, developers and investors have been considering alternative asset classes. The medical sector although it doesn’t come without it’s challenges is quite a resilient sector where demand is driven by the large population growth, an ageing population, lifestyle diseases (Egypt has the highest prevalence of diabetes in the region), high disposable incomes in some segments, and insurance involvement .

Cairo currently has an average that is lower than 0.5 beds per 1,000 population; this is much lower than the global average of 4.8 beds per 1,000 population. Just to maintain this average Cairo requires 32 new hospitals within the next 5 years. This is one of the lowest averages across MENA and implies that there are huge opportunities for growth in that sector. In order to reach the global average, Cairo would need to build more than 2,700 hospitals by 2022.

The current level of government spending is quite low (5.2% of the state budget or circa USD 6.3 billion) and this provides for further opportunities for the private sector to get involved in this alternative asset class. Currently 73% of hospitals are owned and managed by the private sector. Our Health Returns report details the opportunity for regional investors.

About JLL: Our expertise covers the full range of healthcare investment related real estate including, sheltered housing, retirement villages and assisted living, hospitals, polyclinics and family health centres, as well as wellness centres and bio-medical business parks and even bio cities. Contact JLL Egypt to know more about emerging asset classes for investors, developers and operators.

brick street cairo

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.

More from our blog

See all posts