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Egypt Real Estate Report Q1 2011
Business Monitor International, Nov 2010, Pages: 71
Business Monitor International's Egypt Real Estate Report provides industry professionals and strategists, corporate analysts, real estate associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Egypt'S Real Estate industry.
Investor sentiment in real estate in Egypt is increasing, according to Jones Lang LaSalle’s Real Estate Investor Sentiment Survey, released in April 2010 –Egypt is now second only to Saudi Arabia. Egypt has a large and rapidly growing population, a growing economy, high regional demand and an increasing supply of premium commercial property. All real estate sectors are in the upturn stage of the property market cycle. There is strong demand, and the expectation of further rental and price growth in 2010 and beyond.
Despite the global economic downturn, the Cairo real estate market has remained largely stable. Demand for real estate in Cairo is expected to continue rising, but at a lower rate than in 2006-2008, when overoptimistic speculation and the search for yields took over. Demand in the Cairo market is cash-driven and directed by the end-user, as opposed to being mortgage-dependent and/or speculative. In the office and retail sub-sectors, rents and capital values have been increasing during the year across five cities (Cairo, Alexandria, 6th of October City, New Cairo and Giza), as yields have fallen. In the less active industrial sub-sector, rents and yields have shown little movement. There has been a significant increase in the supply of commercial property, including new city developments to the east and west of Cairo, as well as projects in Cairo. This activity is rectifying the long-standing problem of underdevelopment in these areas.
Demand is on the increase, as more western multinationals set up bases in Egypt, and as more Middle Eastern companies relocate to Egypt, often because of adverse conditions in other regional countries, such as Dubai and Lebanon. As a result, market conditions are dynamic. Vacancy rates are generally low or falling. The office and retail sub-sectors can expect double-digit increases in rentals in 2011, with smaller increases over following years.
Egyptian economic growth will be 4.7% in FY09/10. In 2010/11 this will rise slightly to 4.9%. In 2011- 2014, we forecast the growth rate to improve, averaging 5.2%. The Egyptian government will continue to assist the economic recovery by maintaining an expansionary fiscal policy. While the fiscal deficit will widen in absolute terms in the short term, over the longer term, the fiscal position will improve after a slowdown in spending, outpaced by the growth rate recorded by revenues.
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