Cairo’s real estate market has witnessed an ongoing uplift in performance across most sectors with the residential sector, in particular benefiting from increased sale prices in 2018, according to JLL’s latest market report.
The report said, “according to Oxford Economics, Egypt’s GDP growth is expected to accelerate to 5.3% in the 2017/2018 fiscal year compared to 4.2% in the previous year. This accelerated growth is attributed to stronger industrial production, recovering tourism, and increased investment.”
The report noted that increased investor confidence is evident across the residential market with developers reporting positive sales performances and construction of the New Capital City fast on track.
The report noted that sales sector continues to outperform the rental sector, with sales prices increasing, while rentals have fallen marginally across all sectors, during second quarter (Q2) of the current year. This reflects healthy sales demand from millennials entering the prime home buying age and the country’s fast growing population.
Ayman Sami, JLL’s country head in Egypt, said that the second quarter of the current year shows that there has been a notable shift in demand from the secondary sales market to newly developed units being offered directly from developers, as the former has become relatively less affordable.
Sami noted that developers have been able to capitalise on this trend through launching smaller, more affordable units on competitive payment plans.
He pointed out that although the real estate market remained relatively unchanged in Q2, the ongoing positive sentiment and strong performance across most sectors continue to provide attractive market conditions for further investment, in line with the government’s ongoing focus on economic development.
He continued that in the office sector, several residential developers have announced new office projects for sale on extended payment terms as they seek to replicate the success of residential launches. With a relatively stable Q2 performance, the sector is posed close to the bottom of its cycle, with some upside potential for rentals over the next 12 months.
The strongest performing sector of the market in Q2 were hotels on the back of continued government efforts to increase visitor arrivals through global touristic campaigns and improved security increasing flight arrivals. Hotel occupancies and room rates have increased with performance expected to receive a further boost from the opening of the long anticipated Grand Egyptian Museum and the new Sphinx international airport later in 2018, according to the report.
He elaborated that the outlook remains positive overall for the residential, office, and tourism sector owing to overall economic growth and stable political conditions.
There has been little change in retail rentals in Q2, but continued confidence among investors is contributing to positive sentiment. Developers continue to seek optimising their centres through incorporating retail concepts, in line with the constantly changing preferences of their target clients.