Cairo’s Real Estate Sector Poised for Growth

As Egypt’s market conditions stabilised and business confidence grew, Cairo is set to receive approximately 540,000 sq m of new office space in the second half of the year, primarily in the New Administrative Capital (NAC) and New Cairo, though some projects may face delays in handover due to slow construction or leasing difficulties.

During the second quarter, around 15,000 sq. m. of office gross leasable area (GLA) was delivered, expanding the total stock to over 2 million sq m, Jones Lang LaSalle (JLL) MENA said in its report on Cairo real estate market.

The office sector experienced a recovery in overall business confidence in the country during the second quarter. Enquiries for large office spaces between 2,000 and 5,000 sq. m. increased, and demand for high-quality Grade A supply grew due to limited availability.

New Cairo, offering more high-quality office spaces, attracted the most demand, driven by existing tenants seeking to either expand or relocate.

“That said, average citywide rents decreased by 2% annually to reach $356 per sq m per annum. Prime rents saw a 6% annual reduction but remained stable compared to the previous quarter at $480 per sq m per annum.

Positive Momentum

The Central Bank’s decision to float the Egyptian pound in Q1 has brought much-awaited stability to the market, igniting a shift in sentiment for the office sector in Cairo. This pivotal decision is anticipated to generate long-term improvement and growth opportunities.

The office sector in Cairo is poised to experience positive momentum and the availability of high-quality office spaces will drive further growth, attracting both local and international occupiers seeking strategic locations in a thriving market.

Additionally, the serviced offices sector has witnessed an influx of new players entering the market, driven by its rising popularity among new market entrants. This promising trend indicates an anticipated surge in demand for serviced offices in the short to medium term, creating significant expansion and investment prospects.

Residential Sector

In the second quarter of 2024, approximately 2,200 residential units were completed, adding to the existing stock of around 278,000 units, with apartments dominating the completions. Looking ahead, more than 22,000 units are expected to enter the market in the second half of the year.

Due to market uncertainties, developers adopted a cautious approach and selectively launched new projects, managing costs and liabilities. Although the market began to stabilise in Q2, future projects are anticipated to face delays.

The residential market experienced an unprecedented rise in sale prices and rents, driven by a combination of currency devaluation and soaring inflation. Notably, in places such as 6^th of October, sales prices increased by around 175% annually in the second quarter of 2024, while New Cairo saw 180% year-on-year growth.

The rental market also witnessed substantial growth, with rents in 6th of October and New Cairo rising by 101% and 122%, respectively, in Q2, compared to the same period last year.

Outlook

Cairo’s residential sector is poised for long-term improvement, driven by several factors. The recent stability following the currency devaluation, along with the Ras El Hekma deal and the partnership etween Egypt and the European Union in late June, has repositioned Egypt as an attractive destination for foreign direct investment (FDI).

These developments present opportunities for the real estate market to thrive. In terms of rental demand, it is expected to surpass the availability of units for sale, given the disparity between rising inflation and income levels.

The market’s outlook suggests that Cairo’s residential sector is expected to experience positive growth and potential investment opportunities, driven by stability, FDI prospects, and evolving dynamics in the long run.