CBRE posted the largest revenue among international commercial real estate services and investment firms in 2014. The company has been classified as a S&P 500 by Standard and Poor’s financial services company. The company serves real estate owners, investors, and occupants at approximately 400 offices worldwide.
CBRE offers strategic advice and execution for property sales and leasing, corporate services, property, facilities and project management, mortgage banking, appraisal and valuation, development services, investment management, and research and consulting.
Daily News Egypt met with CBRE Middle East Managing Director Nick Maclean to discuss the outcomes of the company’s first public report on Egypt’s real estate market.
What business does CBRE carry out in Egypt?
We have done some private reports on the Egyptian real estate market and about some real estate companies. We issued our first public report in April as a snapshot of the Egyptian market.
Egypt is considered a very important partner for doing business in the Middle East. We have done a lot of work over the past three years, especially as we are looking for investment in Cairo’s market. The company opened an office in Cairo last September with 30 employees whose primary work is with international clients. Egypt is set to have strong growth in business for the next two years.
What are your expectations for Egypt’s real estate market?
There is a strong demand from Gulf Cooperation Council (GCC) member countries, especially Saudi and Emirati investors.
Political stability has generated more demand and prices are going up. There is an opportunity for the economy to grow and the real estate market in Egypt is a key aspect for this growth.
What is your opinion on homeowners’ increased demand for second properties despite the economic circumstances?
This increased demand was caused by the devaluation of the Egyptian pound against the dollar. Egyptians living abroad have more incentive to buy a second property in Egypt. Political stability has also given people more confidence to buy and invest in the residential property market.
What are the company’s plans in Egypt?
The company is looking to ensure international companies can meet their profit requirements as much as it is seeking to increase its exposure in international markets. Further, CBRE is looking to offer consultancy services to government ministries in their provision of facilities to urban infrastructure.
What is the gap between demand and supply in the Egyptian market?
In 2015, demand was recorded at about 225,000 residential units. There was a shortage of approximately 125,000 units.
Which real estate projects do you consider successful?
There are very successful schemes in Egypt, such as Pyramids Heights, Smart City and Cairo Festival City. These are very attractive to the international market as they provide high quality, well-maintained accommodation.
What are the most promising areas in the real estate market?
New cities are the most in demand. There is a lot of money in Cairo at the moment owing to the high number of people who are keen to invest in the market, especially the Egyptian expatriate community. In addition, the devaluation of the Egyptian pound has caused people to look for long-term investment which has a good return.
In your opinion, which sector is the most promising in the real estate market: retail, offices, or residential units?
The office market is the most promising, especially grade A offices in east and west Cairo where there are approximately 960,000 available units. After that, the retail market is the next most promising. It is considered a key sector for growth.
High-quality office accommodation is in short supply. Therefore, I think that developers are seeking new high-quality commercial accommodations.
Do you expect the price of retail, residential units and commercial offices to increase?
Yes. Due to the lack of high-quality accommodation and the lack of new construction schemes, we will see increased demand for units, especially in Cairo Festival City. People are prepared to pay a higher price than other areas.
In your opinion, what obstacles hinder the development of the real estate market in Egypt?
The most prominent problem is the availability of land for construction. This must be solved, particularly if the government wants to attract international investors.
What is your opinion on the new trend of real estate developers forming partnerships?
The government is working to stimulate the market and is doing its best to control the infrastructure in order to develop the sector. It still has the opportunity to stimulate the sector by creating partnerships. You can see how this has been done successfully in the UAE. DAMAC Properties is one of these successful projects. In addition, partnerships with overseas groups, such as the GCC, are going forward. I think the Egyptian government seeks international and local developers.
Which other Arab countries have promising real estate sectors?
The UAE has a successful international commercial office market with a very strong commitment from international institutions.
Is the company planning to launch a specialised real estate services team for the health and education sectors across the Middle East?
The company is seeking to attract investors in health care and education. The company is also looking for cash in the region to fund schools and hospitals, as government institutions intend to improve these services and may not have the necessary funds. Thus investors can take the investment risk and provide facilities and operational capital for these but they need a good return which the government can guarantee.
In which Arab is CBRE running these services?
We are running these services in Egypt, Saudi Arabia, the UAE and Bahrain.