The residential property market in Cairo, Egypt, posted solid growth in the first quarter amid a sharp rise in the apartment and villa sale prices compared to the previous year, said a report.

The real estate market showed signs of strengthening, as a result of recovering economic and political sentiment, stated property expert JLL in its review on Cairo's real estate sector for the first quarter.

Many of the residential developments in the Egyptian capital have few units left and have increased prices accordingly, said JLL in its report that assesses the latest trends in the office, residential, retail and hotel sectors.

JLL said the performance in the rental sector remains more mixed, with some rents increasing while others are reducing. This is due to the generally unstructured nature of the rentals market in Egypt.

There are 250 units in Al Rehab City and 640 units in Zayed complex which got completed in the first quarter and an additional 31 residential developments with 30,000 units are expected to be completed this year.

The contribution of Palm Hills Development is notable, with five of their developments planned to be delivered in Q2 alone, stated the JLL report.

On the office sector, JLL said Cairo witnessed a slight improvement during the first quarter as rental rates increased significantly in New Cairo (mainly in sector one and two), due to relatively higher demand.

The rental rates in Central Cairo and West Cairo remained unchanged, stated the property expert.

The major completion in the first quarter was Park Avenue located on the Cairo Alexandria Desert Road. This 15,000 sq m development is now complete, but not yet operational, it added.

JLL said the year-on-year increase in vacancy rate from 21 per cent in the first quarter of 2014 to 33 per cent this year is mainly due to more than 100,000 sq m of additional commercial office space created throughout the year.

However, the vacancy rates decreased recently by two per cent since the fourth quarter of 2014, signalling stronger demand for commercial space, it added.

Cairo’s retail sector experienced an increase in average retail rents up 13 per cent when compared to the previous year. An additional 372,000 sq m of retail GLA is expected to enter the market this year, in which 264,000 sq m are due for completion during the second quarter.

The additional supply in the next quarter is mainly due to the completion of Waterway Mall in New Cairo City, adding 11,000 sq m of retail space, JLL report said.

There are a number of major completions planned for the remainder of 2015, including Madinat Mega Mall (104,000 sq m), Citadel Plaza (120,000 sq m), Capital Mall (40,000 sq m), Mall of Arabia expansion and Mirage Mall ( in New Cairo), it added.

Ayman Sami, the head of Egypt Office at JLL Mena said: "All sectors of the Cairo real estate market have witnessed positive performance and improved sentiment. Significant efforts by the government to expand the economy and attract investors, including the recent Egyptian Economic Development Conference, have resulted in confidence and new investment commitments of more than $12.5 billion from four GCC countries."

This confidence is most clearly demonstrated by the recently announced mega real estate project of the new Cairo Capital, which marks a natural long term progression to the East of Cairo, he noted.

"With the residential sector reflecting the recovering economy, residential sale prices continued to increase across Cairo in the past quarter with the completion of new units in Al Rehab City and Zayed complex adding to the current supply," observed Sami.

"With an additional 372,000 sq m anticipated through a number of major new malls, we expect the retail market will experience an increase in vacancy rates and downward pressure on prices," he added.

On the hotel sector, Sami said Cairo did not see any project completion, although the reopening of the Nile Ritz Carlton (331 keys) and the completion of St. Regis Cairo (292 keys) are expected later this year.

"The occupancy rates have witnessed a significant increase, reaching 53 per cent year to February in comparison to the 35 per cent recorded in the same period of 2015," he noted.

Egypt too has seen a 33 per cent increase in foreign tourist arrivals in March 2015 (in comparison to the same month last year), indicating a possible further improvement in market conditions in 2015, he added.-TradeArabia News Service