Egypt Real Estate Report Q3 2012
Business Monitor International, May 2012, Pages: 62
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.
The Egypt Real Estate report examines the Commercial Office, Retail and Industrial segments in the context of a market, which in spite of its long-term potential, continues to be susceptible to instability and which will be characterised by the aftershocks of the Arab spring in the short- to medium term. With a focus on the principal areas of Cairo, New Cairo, 6th of October City and Giza, the report covers the rental market performance in terms of rates and yields over the past 18 months. The report also examines how best to maximise returns in the commercial real estate market, while minimising investment risk and exploring the effect of a stalled pipeline on a market, which until the events of early 2011 held so much potential. The key risks and opportunities driven by domestic and regional investor activism, combined with the future potential of the domestic consumer market, are also explored; with macroeconomic fundamentals and political developments underpinning short-term industry sentiment and performance.
We see little prospect for a swift economic recovery in Egypt in 2012. Although we remain bullish in the long-term, our full-year 2011 data has started to reveal the tangible effects of Egypt’s uneasy political transition on 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 Points:
- High quality space across the three sub-sectors is forecast to outperform due to a shortage of new supply and client desire to reduce the risk profile of their businesses wherever possible.
- We expect growth to remain anaemic through end-FY2011/12, with investment not picking up until after the conclusion of presidential elections in late June. The vote should provide a degree of clarity over the country's future political trajectory and policy climate.
- The political environment will remain volatile and we remain cautious of the risks of missing the broader picture. We have little indication that an era of renewed stability will emerge in the short term, regardless of any pending court verdict regarding the legitimacy of the constitution.
- With the political backdrop likely to remain volatile over the coming quarters, growth momentum will fail to gather much steam. Real GDP is forecast to expand 2.1% in 2012, which is up only marginally on the 1.8% rate of growth posted in 2011.
- We have become decidedly more bearish on the outlook for the Egyptian pound. With reserves rapidly declining, we expect a devaluation to EGP7.0000/US$ in the first instance.
- Our interest rate forecasts have been revised. We are projecting the benchmark lending rate to be raised to 11.00% by end-2012, from 10.25% currently.
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 Office Rents, 2010-2011 (US$ per m2/month)
Supply and Demand
Table: Terms Of Office Rental Contract/Leases, Mid-2011
Industry Forecast Scenario
Table: Forecast Office Rents, 2012 (US$ per m2/month)
Table: Forecast Net Office Yields, 2008-2016 (%)
Market Analysis – Retail
Rents and Yields
Table: Historic Retail Rents, 2010-2011 (US$ per m2/month)
Table: Net Retail Yields, 2010-2012 (%)
Table: Terms Of Retail Rental Contract/ Leases, Mid-2011
Supply and Demand
Industry Forecast Scenario
Table: Forecast Retail Rents, 2012 (US$ per m2/month)
Table: Forecast Net Retail Yields, 2008-2016 (%)
Table: Egypt Retail Sales Indicators, 2008-2016
Market Analysis – Industrial
Rents and Yields
Table: Historic Industrial Rents, 2010-2011 (US$ per m2/month)
Table: Net Industrial Yields, 2010-2012 (%)
Table: Terms of Industrial Rental Contract/ Leases, Mid 2011
Industry Forecast Scenario
Table: Forecast Industrial Rents, 2012 (US$ per m2/month)
Table: Forecast Net Industrial Yields, 2008-2016 (%)
Construction And Infrastructure Outlook
Table: Egypt Construction And Infrastructure Industry Data & Forecasts, 2007-2015
Table: Egypt Construction And Infrastructure Industry Long-Term Forecasts, 2013-2021
Construction And Infrastructure Forecast Scenario
Macroeconomic Outlook
Table: Egypt - Economic Activity, 2011-2016
Real Estate Risk/Reward Ratings
Real Estate/Construction Risk/Reward Ratings
Table: Middle East And North Africa Risk/Reward 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
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
- Saudi Egyptian Construction Company (SECON)
- SODIC
- TMG Holding
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