The Cairo real estate market is most likely to remain subdued in the short term, ahead of a potential period of gradual recovery from late 2014 or 2015, said a report.

While there have been new completions in the residential and retail sectors during Q1, many projects continue to be delayed given construction and permit issues and the uncertain political outlook, said the Cairo Real Estate Overview report by JLL, a leading real estate investment and advisory firm.

The office market saw a marginal decrease in vacancies (to 21 per cent) but this was not significant enough to result in any increase in average rentals, that remained unchanged during Q1, it said.

There has been a shift of demand within the residential leasing market, away from villas (where rents have declined) towards apartments (where rents have increased) as apartments are seen as more secure and are often available on a shorter term lease.

The retail market has been relatively quiet during Q1, with no significant completions and average rentals remaining largely unchanged. The most active sector of retail demand has been from F&B operators for space within malls and in street front locations, it said.

The upcoming  presidential election (scheduled for late May) is the major short term political challenge facing Egypt. The conduct of the election and how the results are accepted will go a long way to determining how quickly confidence returns to the real estate market, said the JLL report.

Economic news over Q1 2014 has been mixed with a slight  bias on the positive side, with the assistance of continued financial and political support from the Gulf states, it said.

Ayman Sami, head of Egypt Office at JLL, said: “Egypt’s political situation remains a primary driver of economic conditions, and therefore the real estate market in Cairo. All  four sectors of the Cairo market – residential, retail, office and hotel –  remained relatively subdued and close to the bottom of their current market cycle during Q1 2014. This is not uncommon ahead of noteworthy elections, and we will monitor them closely to see what the likely impact on real estate will be going forward. If political stability continues to drive an improvement in the economic environment, then rents could start to increase again towards the end of 2014.” - TradeArabia News Service