Egypt's real estate market is experiencing a significant resurgence, driven by renewed investor confidence, a stabilized currency, and substantial foreign direct investment. This marks a positive turning point for the sector, according to JLL's Cairo Real Estate Market Overview Report for Q1 2024. Residential Sector Experiences Robust Growth The report indicated that Egypt's residential sector witnessed a strong start to 2024, with the completion of over 7,000 units, primarily within large-scale master-planned developments. This expands Cairo's total residential stock to approximately 276,000 units, with nearly 24,000 more units slated for completion throughout the year. Developers are actively initiating new projects, with a particular focus on New Cairo and its upcoming East expansion. Prominent upcoming developments include "At East" by Al Ahly Sabbour in Mostakbal City and "The Crest" by IL Cazar Developments in New Cairo. These projects signal continued confidence in the market's potential. Moreover, JLL's report indicated that while the stabilized currency has provided developers with a clearer outlook for pricing strategies, rising interest rates and inflation have prompted some potential buyers to adopt a more cautious approach. Despite this, Cairo's secondary market has seen unprecedented price increases. Sales prices surged by nearly 83% annually in the 6th of October and a staggering 95% in New Cairo. Rental rates followed suit, increasing sharply by 42% and 43% in these areas, respectively. "The real estate sector is a critical pillar of Egypt's economy, and its current trajectory reflects renewed confidence in the market," said Ayman Sami, Country Head, JLL Egypt. "Favorable government policies, a more stable currency, and significant capital inflows are fueling growth. The long-term outlook remains positive, supported by sustained demand and a favourable investment climate." Hospitality Sector Benefits from Strategic Initiatives Bolstered by cross-border collaborations, increased foreign investment, and a government initiative to enhance tourism, Egypt's hospitality sector is also experiencing growth. The country has an ambitious goal of welcoming 30 million visitors by 2028, with plans to significantly expand its hotel capacity by nearly 250,000 keys. While no major hotels opened in Q1, the remainder of 2024 is expected to see the opening of several new hotels and the renovation of existing properties. Hotel performance in Q1 2024 saw a slight decline in city-wide occupancy for Cairo, reaching 65% for YT March 2024. Average daily rates (ADR) also decreased by 10% compared to the same period last year. However, increased tourism, fueled by strategic initiatives like the Ras El Hekma deal with the UAE, is expected to boost the sector throughout the year. Retail Sector Adapts, Office Market Awaits Clarity The retail sector is navigating challenges stemming from delayed projects and limited consumer spending. This has led to the exit of some international brands. However, local brands are seizing the opportunity to fill vacancies in malls, contributing to increased occupancy levels. The outlook is particularly favourable for local production and brands, with marketing campaigns encouraging this shift. Approximately 402,000 sq.m. of retail space is expected to be delivered in the next nine months. The office sector saw the addition of 9,500 sq. m. of space in Q1 2024, bringing the total stock to over 2 million sq. m. Demand for grade-A office space is expected to drive further development. While office sales declined in Q1, average rents remained stable. The recent currency stabilization is expected to boost confidence in the office market by offering clarity on pricing and leasing terms.
