Cairo’s real estate market remained stable in the second quarter (Q2) of 2020, despite the challenging global economic conditions, according to JLL’s Cairo Real Estate Market Performance report.
“The real estate market in Egypt continues to benefit from the various initiatives that have been put in place by the government across all sectors,” said Ayman Sami, Country Head for Egypt at the real estate consultant company.
“We anticipate this to continue driving demand and attract international investments in the mid-to-long term,” he added.
Sami further added, “Despite a slowdown in Q2, the residential market performed comparatively well on an annual basis and it saw the completion of one project in Q2 of 2020, bringing the total stock to 159,000 units.”
The report added that around 35,000 units are currently under construction and are expected to be completed in the second half (H2) of the year.
“In order to attract new developers and investors in the long term, the Central Bank of Egypt (CBE) has reduced interest rates by 3%, the lowest rate since 2016, with the aim to support and finance projects through bank loans rather than relying on off-plan sales,” the report read.
It also highlighted that primary and secondary rents in the retail market have increased by 5% to 10% annually. These are expected to remain stable with mall operations gradually getting back to normal.
Landlords continue to offer incentives to support tenants that include waived service charges and rent free periods. Some landlords have also adopted a revenue-share model to support retailers to account for the loss of sales due to the novel coronavirus (COVID-19) pandemic.
E-commerce is still on the rise as consumer preferences lean towards online shopping, allowing for a prominent number of home-grown businesses to emerge.
Cairo’s market for office space will remain two-tiered, and while the demand is high for smaller fitted-out primary office space, the requirement for flexible office space is expected to witness a slowdown in the short-to-medium term. This is due to small- to medium-sized enterprises (SMEs) and start-ups now realising they can work from home, the report mentioned.
The government continues to support the sectors most impacted by the pandemic, with initiatives such as allowing corporates to pay income tax in three instalments rather than one. The government has also increased the tax exemption limit from EGP 8,000 to EGP 15,000 for all employees, while increasing the annual income of the public sector and state employees by 7% and 12% respectively.
In light of travel restrictions, the hotel market witnessed a significant decline as occupancy levels registered 42% in the year up to May 2020, the lowest rate registered since 2013.
In a move to soften the impact on the hospitality sector and boost domestic tourism, the government allowed hotels to reopen to local tourists in May and operate at 25% capacity – provided the properties comply with strict precautionary guidelines. The government has also committed part of the $2.7bn emergency support loan granted by the International Monetary Fund (IMF) to the hospitality sector, in an effort to support the sector further.