Despite the current political situation, the Egyptian real estate market continues to attract interest from leading developers and investors from the UAE who are committed to projects in Cairo, said a report.
While there are signs of stabilisation in certain sectors, the market continues to be challenged by political unrest which is impacting economic recovery critical for growth in the Cairo real estate market, stated Jones Lang LaSalle, the leading real estate expert in its review on Cairo real estate.
Commenting on the report, Ayman Sami, the head of Egypt Office at JLL said: “The Cairo real estate market still holds a strong set of long term fundamentals which cannot be ignored by stakeholders. However, the ongoing political instability is impacting overallsentiment and is leading to a slowed pace of recovery in the short to medium term.”
“In this challenging scenario, it is interesting to note that the market is still witnessing selective interest in certain sectors of the Cairo real estate market. The hospitality sector is seeing some progress in the third quarter as we are witnessing some confidence returning to Egypt’s lucrative tourism market,” Sami pointed out.
In the office market, occupiers who had put their plans on hold are expected to start reconsidering relocation options. Similarly, there could be new entrants in the office market who would seek to take advantage of cost competitiveness, said the official.
On the other hand, due to high inflation rates over the past couple of years, the retail market will continue to suffer in the short term and will dramatically affect the consumer’s ability to spend on non-essential products and services, he added.
According to the JLL report, the debt levels have continued to increase, with Egypt currently having $45 billion of foreign debt, which the interim prime minister has referred to as safe. The Central Bank estimates Egypt’s domestic debt has increased in Q3 to around $208 billion.
The interim government has made progress on a number of the key reforms required to stimulate the Egyptian economy. These include a panel in place to implement minimum wages across Egypt and a plan to extend the current real estate tax to the industrial and hospitality sectors.
The authorities have launched two new electrical power plants in the city of Banha which will commence operation at the beginning of November, producing around 750 megawatts of energy. This represents the next stage of the $635 million projects to increase Egypt’s power production.
Craig Plumb, the head of research at JLL Mena, said: “Despite the current political situation, the Egyptian real estate market continues to attract interest from both local and regional stakeholders, with developers and investors from the UAE and elsewhere in the region committed to projects in Cairo.”
“The office leasing market has seen activity from corporates seeking to move from central locations to suburban locations, while a number of key projects remain on track for completion before the end of 2014, added Plumb.