Egypt's real estate market remained resilient in the second quarter (Q2) of 2025, with steady growth across key sectors driven by improving economic conditions, ongoing government initiatives, and a surge in tourism activity, according to JLL's latest Cairo Market Dynamics report. Contents * Residential Sector: Steady Deliveries, Soaring Rentals * Retail Sector: Positive Momentum and Evolving Tenant Mix * Hospitality Sector: Record Growth as Tourism Booms * Office Sector: Cautious Growth and Rising Demand * Outlook: A Market in Transition, Poised for Long-Term Growth Ayman Sami, Country Head of JLL Egypt, commented: "The resilience of Cairo's real estate market as economic pressures ease is reflected in strategic diversification across sectors. A strong push for innovation, paired with solid demand drivers, positions the market for continued growth and enhanced investor appeal." Residential Sector: Steady Deliveries, Soaring Rentals The residential market maintained strong momentum, with 7,300 units delivered during the quarter—raising Cairo's total housing stock to 309,100 units. An additional 21,750 units are scheduled for completion in the second half of the year. Sales prices continued to track headline inflation, with notable annual increases in 6th of October (18.0%) and New Cairo (15.9%). Meanwhile, rental rates outpaced inflation, surging by 25.5% and 17.7% in the same areas, respectively. Although rental demand remains strong, affordability challenges in the for-sale market have emerged, as wage growth lags behind inflation. In response, developers are increasingly diversifying portfolios by expanding beyond Cairo into destinations such as the North Coast, the Red Sea, and international markets to mitigate risk and tap into new demand streams. Looking ahead, recently announced fiscal policies—including a VAT hike on construction services from 5% to 14% and the removal of gas subsidies—are expected to elevate construction costs and may prompt developers to reassess pricing and project timelines. Retail Sector: Positive Momentum and Evolving Tenant Mix Cairo's retail stock expanded by 12,600 sqm in Q2, reaching a total of 3.2 million sqm. An additional 86,700 sqm is projected for delivery by year-end, mostly concentrated in New Cairo. Rental rates showed healthy year-on-year growth, with increases of 7.6% in Prime malls, 7.2% in Super-Regional malls, and 8.6% in Community malls. Vacancy rates dropped notably from 9.2% in Q2 2024 to 7.2% in Q2 2025, signaling improved tenant retention and demand. Landlords—particularly in smaller retail formats—are recalibrating tenant mixes by reducing reliance on F&B operators and introducing broader retail offerings to enhance footfall and customer engagement. Developers are also partnering with established brands to create experience-led retail destinations. One example is the collaboration between Marakez and luxury jeweler Azza Fahmy to develop the Ramla Beach Clubhouse in Ras El Hekma, set to open in 2026. The North Coast continues to serve as a key testing ground for new retail concepts, buoyed by high-spending local and international tourists. Overall, the retail sector outlook remains positive, supported by easing macroeconomic pressures and stronger consumer sentiment. Hospitality Sector: Record Growth as Tourism Booms Cairo's hospitality stock reached approximately 28,400 keys in Q2, bolstered by the openings of the 860-key Giza Palace Hotel & Spa and the Hyatt Centric Cairo West. Another 970 keys are expected to be added in H2 2025. Despite regional geopolitical challenges, the sector posted strong performance metrics: average occupancy rose by 2.8% year-on-year, Average Daily Rate (ADR) increased by 14.9%, and RevPAR (Revenue Per Available Room) climbed 20.1%. Egypt's tourism sector continues to gain momentum, recording 8.7 million visitors in the first half of 2025—a 24% year-on-year increase. In response, local developers are creating homegrown hospitality brands within mixed-use projects to offer culturally rooted, tailored experiences, enabling greater operational control and brand differentiation. This strategic shift supports a long-term positive outlook for the sector, with expectations of increased diversification and elevated guest experiences. Office Sector: Cautious Growth and Rising Demand The office market saw limited new project launches in Q2, with developers focusing on completing existing phases. Around 83,000 sqm of new Gross Leasable Area (GLA) was added, primarily in New Cairo office parks, bringing total supply to 2.28 million sqm. Occupancy rates improved, with average vacancy falling to 7.4% and prime office spaces reaching as low as 4.5%. Demand was driven largely by companies seeking larger spaces, especially new entrants into the market. Grade A office rents grew 4.7% year-on-year to $334 per sqm, while prime rents posted a similar annual increase of 4.6%. The outsourcing and business services sector remains a key demand driver, with a further 143,200 sqm of office supply anticipated in H2 2025 to meet rising needs. While the outlook for the office sector is cautiously optimistic, future performance will depend on sustained economic stability and demand from high-growth sectors. Outlook: A Market in Transition, Poised for Long-Term Growth Across all segments, Cairo's real estate market is demonstrating resilience and adaptability in the face of both macroeconomic and policy shifts. As developers respond to changing demand patterns and regulatory landscapes, the market is evolving into a more mature, investor-friendly environment, supported by stable fundamentals and strong long-term prospects.
