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Cairo property sees steady growth in Q3

CAIRO, October 12, 2015

The improved economic and political environment in Egypt has resulted in an increasing confidence and positive performance in the real estate market in capital Cairo, said a report.

All sectors of the Cairo real estate market witnessed steady growth during the period, with the office market putting up a solid performance, stated leading real estate investment company JLL in its report that assesses the latest trends in the office, residential, retail and hotel sectors.
 
While domestic sentiment towards the residential market remains positive, prices have declined in US dollar terms, due to the recent devaluation of the currency by the Central Bank, said the Cairo Real Estate Market Overview report.

According to JLL, no new developments or major new phases were completed across the residential market in the third quarter, with only minor additions in the supply in Rehab and Cairo Festival City.

The devaluation of the Egyptian Pound has resulted in a decrease in sales prices of apartments and villas in New Cairo, as well as apartments in 6th October. The only exception was for villas in 6th October, where the shortage of new supply has resulted in a modest price increase (three per cent), despite the currency devaluation.

The rental market has performed more strongly in New Cairo than in 6th October, where rental prices for apartments and villas both declined in dollar terms in 6th October during the period, said the report.

The Retail and Hospitality sectors continued to exhibit slow but steady growth during the third quarter, it added.

The retail market witnessed the opening of Mirage Mall in New Cairo and the completion of a further 8,000 sq m of retail within Cairo Festival City, according to JLL.

No further projects are due to be delivered in the rest of 2015 as construction delays continue. Vacancy rates in existing retail malls remained largely unchanged over Q3, but vacancies have fallen by five to 17 per cent over the past year.

Average retail rents have followed the same pattern as vacancies.  While witnessing no change in Q3, rents have increased by 10 per cent over the past year, it added.

On the hotel sector, JLL said the third quarter saw the completion of the 331-keys Nile Ritz Carlton. The St Regis Cairo (292 keys) which was scheduled for 2015 has now been delayed to the second quarter of 2016.

Ayman Sami, the head of Egypt Office at JLL Mena, said: "Cairo's real estate market has maintained a steady performance and improved sentiment this quarter due to positivity in the overall macro environment. Constructive efforts by the government to boost the economy and investor sentiment have resulted in a ‘market pull’ scenario, which is attracting many developers to launch new projects."

"This positive environment is clearly demonstrated by the completion of major real estate projects including New Cairo and New Suez Canal. Overall, the outlook for all real estate sectors look good  in the fourth quarter of 2015 and beyond," noted Sami.

With the devaluation of the Egyptian Pound, said Sami, there is a marked decrease in sales prices of apartments and villas in New Cairo, which is resulting in increased transactions.

"This aspect along with lower rental values has infused positivity into the Cairo residential market. However, shortage of affordable housing still remains an issue but the good news is that new government initiatives are starting to address this critical gap in the market," he added.

JLL pointed out that in this positive economic environment, there is a trend among tenants to relocate to New Cairo to take advantage of better workspace.

Increased demand for efficient offices has lowered vacancy rates to 26 per cent, and ultimately resulting in exceptional performance for the Cairo office market this quarter. Interestingly, the most significant trend during the quarter has been the return of rental growth in west Cairo for the first time in a number of years.

"Currency devaluation is also making the Cairo hotel market more competitive as costs are becoming more attractive for tourism and leisure visitors, particularly from the dollar pegged Gulf Arab countries. This has resulted in diversion of the local tourist industry from Russia and Eastern Europe, along with a seven per cent year-on-year increase in tourist arrivals," explained Sami.

On the other hand, the Cairo retail market continued to exhibit slow but steady growth during the third quarter. The opening of  Mirage Mall in New Cairo and the completion of a further 8,000 sq m of retail within Cairo Festival City has resulted in unchanged vacancy rates in existing retail malls, but vacancies have fallen by five per cent (to 17 per cent) over the past year.

"A stable environment has also opened up foreign investment, particularly from Saudi Arabia and the UAE," he added.-TradeArabia News Service




Tags: Egypt | property | Cairo | growth |

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