Cairo real estate 'sees growth in some areas'
Cairo, March 26, 2013
Despite the on-going political and economic challenges faced by Egypt, selective growth can be seen in some residential and retails sectors of the Cairo real estate market, a report said.
The office sector has also seen a number of leasing transactions in the first quarter and the residential and retail sectors have witnessed a number of new project launches and the start of several new projects including the ‘Mall of Egypt’ which will be the largest mall in the country, said the report by Jones Lang LaSalle, a leading real estate investment and advisory firm, in its Q1 report.
Commenting on the report, Ayman Sami, head of Egypt Office at Jones Lang LaSalle, said: “Although we are continuing to experience ongoing challenges facing the Cairo and wider Egyptian real estate market we are seeing selective demand and new developments in both the residential and retail sectors within this market.
“Tourist numbers have also increased and while occupancy levels are improving they are being offset by further falls in the average daily rates that is tempering any improvement in RevPAR,” he said.
The report’s highlights include:
• Egypt’s GDP grew by 2.2 per cent in 2012. While the political situation has now partially stabilised, the economy is expected to only recover slowly, with IHS Global Insights predicting real GDP growth of 2.7% in 2013 and 4.2% in 2014..
• The New Urban Communities Authority has announced that the residential and commercial land plots that were scheduled for release at the end of 2012, will now be released by the end of March 2013.
• The Ministry of Finance has announced adjustments to the capital market law to allow for the introduction of Sukuk’s (Islamic bonds that allow creditors to buy shares in a project and generate profits).
• To boost the economy and provide further development opportunities, Egypt’s Industrial Development Authority has announced the release of 1,692 industrial land plots. These plots (with a total area of 5.3 million sq m) are located across several industrial zones in Greater Cairo and other governorates.
• SODIC (one of Egypt's leading real estate companies) has announced strong revenue of EGP 122 million in 2012 from the handover of units in its Allegria residential project in 6th of October. It has also announced gross presales of EGP 347 million from this project, relative to cancellations of EGP 84 million.
Craig Plumb, head of Research at Jones Lang LaSalle in Mena said: “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 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 market. Although there was some improvement in market sentiment and confidence last year, the current situation has brought about a ‘back to square one’ aspect in the first quarter. This has negatively impacted the Governments attempts to kick start the economy and attract further foreign investment. Negotiations about the IMF loan are on-going. A speedy resolution of these negotiations 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.” – TradeArabia News Service