Despite political and economic turmoil, Egypt's real estate market is expected to remain "subdued" but gradually recover in late 2014 and 2015, real estate investment and advisory firm Jones Lang LaSalle said in its quarterly report on Egypt published on Sunday. The first quarter (Q1) of 2014, the report noted, has witnessed several positive economic developments, such as an increase in foreign reserves for the first time since August 2013, the improving performance of the stock market and narrowing budget deficit. Egypt's foreign reserves rose for two consecutive months in February and March. In February, foreign reserves in the Central Bank of Egypt (CBE) marked $17.3bn. Meanwhile, the budget deficit decreased in the first eight months of the 2013/2014 fiscal year (FY) to register 6% of GDP, compared to 8.4% of GDP in the same period in FY 2012/2013, according to Ministry of Finance. If presidential elections in May bring greater macroeconomic stability as is expected, rental values could increase, said Ayman Sami, head of the Jones Lang LaSalle Egyptian office. The method of conducting the upcoming election and the acceptance of its results will affect confidence in the real estate market, the report said. "While there have been new completions in the residential and retail sectors during Q1, many projects continue to be delayed given construction and permit issues and the uncertain political outlook," the report added. In a move that was expected to revitalise the construction sector, former Defence Minister Abdel Fattah Al-Sisi, in cooperation with the Emirati Arabtec Construction Company, announced the construction of 1m residential units for low-income youth. The project is expected to be implemented over a period of five years. The report added that the condition of Egypt's retail market remained unchanged in Q1 2014; however, the most active retail demand has been from food and beverages operators who rented spaces in commercial malls and streets. The rental value of apartments increased in the quarter, as they were seen as more "secure and available" compared to villas whose rental value has declined, the report mentioned. In Q4 2013, Jones Lang LaSalle stated that the signs of improvement in Egypt's economy have had a positive impact on the real estate market, expecting a development of the sector's performance in 2014. The firm added, in its Q4 2013 report, that the retail sector experienced the largest surge in retail construction supply since 2011.
