Cairos Property Market Improves Despite Egypts Instability
News Posted On: 09 July 2013
Over the last two and a half years, Egypt has suffered through revolution, an attempted Islamist takeover and most recently a dramatic military coup that saw the Army imprison President Morsi and call elections to replace him. We might expect to find the Egyptian economy decimated by these upheavals, and Egypt’s economy has been affected. Egyptian GDP grew by 2.2% across 2012, according to HIS Global Insights, while recovery is predicted to be slow, with forecasts of 2.7% growth in 2013 and 4.2% in 2014. Despite this, however, Egypt’s stock market has outperformed its economy, with the benchmark EGX30 index finishing February 2013 at 5, 501 points.
But the country’s real success story is its property market, which reports improvements across the board, with commercial and residential property soaring.
Vacancies in Grade A office buildings slid to 20% in the first quarter of this year, a decrease from 29% in the fourth quarter of 2012, according to Jones Lang LaSalle’s report. A satellite city of Cairo, New Cairo, saw one of its major projects, a 622m2 Grade A office complex, completed in the first quarter of 2013 too, bringing the total stock in Cairo up even as vacancies plummet.
Even though Egypt’s economic future hangs in the balance, its fate likely to be decided by a $4bn IMF loan that’s still under discussion, the residential real estate sector also improved. Approximately 600 new residential units were produced in the first quarter of 2013, including the prestige New Giza project which delivered 175 apartments. Asking prices for apartments in New Cairo increased 4% from the last quarter, to $1, 180/m2. Prices for villas also saw an increase, up 9% quarter-on-quarter to an average of $1, 974/m2.
Cairo’s retail stock remained at 773,000m2, though Jones Lang LaSalle reported a shift in retail strategy, with retailer recolonising high streets and abandoning malls and out-of-town developments.
And although demonstrations and unrest have made Egypt’s streets more dangerous, tourist figures actually rose year-on-year in January this year by 10%, increasing demand for short-term rentals and hotel accommodation.
Craig Plumb, Head of Research at Jones Lang LaSalle in MENA, commented: ‘Egypt’s strong long term fundamentals and the relative lack of modern real estate remain major attractions for both occupiers and real estate investors. Despite the current state of flux, many investors and occupiers are taking a long term view and remain committed due to the enormous potential and future possibilities offered by the Cairo housing market.’ Mr. Plumb cautioned, however, that ‘a speedy resolution of these negotiations [to set up a loan package with the IMF] and the subsequent release of IMF funds remains a key milestone that will impact the pace of economic recovery and that of the real estate sector.’
Written by Les Calvert
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