Egypt Real Estate Report Q2 2012
Business Monitor International, February 2012, Pages: 67
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.
BMI sees little prospects for a swift economic recovery in Egypt in 2012. Although we remain long-term Egypt bulls, at the moment there is very little to suggest that growth will be able to return to the 5-7% area witnessed in the years leading up to the crisis. Data from the central bank clearly shows how February 2011's political crisis derailed the economy, with real GDP expanding by only 0.4% y-o-y in the April-June 2011 period, following a contraction of 4.2% between January-March 2011.
This brought fullyear FY2010/11 growth (fiscal year running from July-June) to 1.8%, compared to the 6.2% average rate of expansion posted between 2006 and 2010. For the moment, we project real GDP to grow 2.1% in FY2011/12, before picking up to 4.9% in FY2012/13 and averaging 6.3% thereafter through 2016.
BMI's newly collected data has started to reveal the tangible effects of Egypt's uneasy political transition upon the commercial real estate market, with retail space suffering particularly from the country's volatility. We expect rents to stabilise over the coming quarters, but beyond the trend of increasing rental divergence, the return to pre-Arab Spring rental rates will be a gradual process.
Key Opportunities In The Real Estate Market:
- Delayed projects open up even more opportunity for developers to meet the needs of a growing population in a healthy economy.
- High quality space across the three sub-sectors is likely to outperform due to a shortage of new supply and client desire to reduce the risk profile of their businesses wherever possible.
- Cairo's satellite cities offer a wealth of potential, due to their geographical proximity to the capital and their symbolic removal from the trouble. BMI's latest figures suggest that the 6th Of October City is set to outperform.
- Significant investment and growth opportunities will emerge once there is more clarity on the political situation. Broadly speaking BMI retains an optimistic view towards the economy's long-term potential. The key underlying factors predicating this long-term view are robust economic growth allied to strong population fundamentals and an urbanisation rate of 2% a year.
Key Risks To The Real Estate Market:
- A resumption of large-scale protests in late January would do further harm to the country's allimportant tourism sector and hold back the economy's growth potential.
- The most notable challenges in the near term include the private sector's lack of access to credit, in addition to an absence of confidence that the current government is capable of steering the economy through ongoing domestic and external headwinds.
Executive Summary
SWOT Analysis
Egypt Real Estate/Construction SWOT
Egypt Political SWOT
Egypt Economic SWOT
Egypt Business Environment SWOT
Real Estate Market Overview
Market Analysis – Office
Rents And Yields
Table: Historic Rents, 2010-2011 (US$ per m2/month)
Supply and Demand
Table: Terms Of Rental Contract/Leases, Mid-2011
Industry Forecast Scenario
Table: Forecast Rents, 2012 (US$ per m2/month)
Table: Forecast Net Yield, 2008-2016 (%)
Market Analysis – Retail
Rents and Yields
Table: Historic Rents, 2010-2011 (US$ per m2/month)
Table: Net Yield, 2010-2012 (%)
Table: Terms Of Rental Contract/ Leases, Mid-2011
Supply and Demand
Industry Forecast Scenario
Table: Forecast Rents, 2012 (US$ per m2/month)
Table: Forecast Net Yield, 2008-2016 (%)
Table: Egypt Retail Sales Indicators, 2008-2015
Market Analysis – Industrial
Rents and Yields
Table: Historic Rents, 2010-2011 (US$ per m2/month)
Table: Net Yield, 2010-2012 (%)
Table: Terms of Rental Contract/ Leases, Mid 2011
Industry Forecast Scenario
Table: Forecast Rents, 2012 (US$ per m2/month)
Table: Forecast Net Yield, 2008-2016 (%)
Construction And Infrastructure Outlook
Table: Egypt Construction And Infrastructure Industry Data, 2008-2016
Table: Egypt Construction And Infrastructure Industry Data, 2012-2020
Construction And Infrastructure Forecast Scenario
Macroeconomic Outlook
Table: Egypt – Economic Activity, 2011-2016
Business Environment
Real Estate/Construction Business Environment Ratings
Table: Middle East And Africa – Business Environment Ratings
Egypt's Business Environment
Table: BMI Business And Operation Risk Ratings
Institutions
Table: BMI Legal Framework Rating
Infrastructure
Table: Labour Force Quality
Market Orientation
Table: Middle East & Africa – Annual FDI Inflows, 2008-2010
Table: Trade And Investment Ratings
Table: Top Export Destinations, 2001-2009 (US$mn)
Operational Risk
Competitive Landscape
Company Profiles
Egyptian Resorts Company
Nasr City Housing and Development
Orascom Construction Industries
Palm Hills Development
Saudi Egyptian Construction Company (SECON)
SODIC
TMG Holding
BMI Methodology
How We Generate Our Industry Forecasts
Construction Industry
Bank Lending
Real Estate/Construction Business Environment Rating
Table: Weighting Of Indicators
Sources
- Egyptian Resorts Company
- Nasr City Housing and Development
- Orascom Construction Industries
- Palm Hills Development
- Saudi Egyptian Construction Company (SECON)
- SODIC
- TMG Holding
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