There’s a reason investors consider Egypt’s real estate market a sound, stable investment even in a volatile climate. With an increase in population of about 2.5 million people per year, it is unlikely the appetite for real estate across the nation will diminish any time soon — pandemic, or otherwise.
In fact, in October 2020, the IMF revised its economic growth forecast for Egypt, dialling it up from an initial projection of 2% to an improved one of 3.5% — Egypt’s economy was now outperforming that of the rest of the region. And according to Ayman Sami, Country Head for Egypt at JLL, a substantial chunk of this growth can be laid at the doorstep of the nation’s real estate sector.
So what’s in store for Egypt’s property market in 2021? Ayman Sami tells us what to expect.
HOW WOULD YOU DESCRIBE EGYPT'S PROPERTY MARKET ACROSS SECTORS IN THE WAKE OF THE COVID-19 PANDEMIC?
I would say the Egyptian market proved quite resilient, with real estate coming out one of the strongest drivers of the economy. But I wouldn’t say the performance was uniform across segments. For example, the hospitality sector was hit the hardest with RevPar (revenue per available room) down by 70%, and occupancy levels down to 28%. The retail segment, however, saw a quick recovery and even some growth in the second half of the year. And the office sector remained stable, with continuing high occupancy levels in east Cairo.
SO WHICH WAS THE BEST PERFORMING ASSET CLASS OF 2020 - WHY DID IT OUTSTRIP OTHERS?
Both, the retail sector as well as the residential sector, performed well in 2020. The residential sector because it is a defensive sector — it is always seen as ‘safe haven’. The retail sector, in spite of the restrictions on mall timings and capacities, owing to the uptick in e-commerce towards the latter half of the year. Footfall also eventually picked up, particularly in outdoor retail spaces — shopping is, after all, a form of socialisation.
WHAT IS THE OUTLOOK FOR EGYPT'S PROPERTY MARKET IN 2021?
The outlook is optimistic, particularly in light of projected economic growth, the widespread prevalence of better safety standards, and vaccine rollouts. As the economy grows and movement increases, affordability levels will respond and start to rise. This will reverberate across the real estate market. Of course, not every sector will respond equally, but there will be an overall improvement.
SO WHICH REAL ESTATE SECTORS WILL DO WELL?
Throughout the various stages of macroeconomic challenges, the residential asset class proved resilient and will continue to do so. Retail is quite sensitive to change, but it is also quick to recover. And it will definitely respond to increases in purchasing power. Online businesses will continue to grow, and this will trigger a stronger demand for logistic space and warehousing.
AND WHICH SECTORS WILL BE SLOW TO RECOVER?
The hospitality sector might be the last to recover since the revival of tourism depends on global efforts to curb the pandemic. It should recover in line with vaccine rollouts around the world. The remaining sectors, however, are closely linked with local demand drivers and are therefore likely to perform well.
WHAT ABOUT GOVERNMENT MEASURES - HOW WILL THEY INFLUENCE INVESTMENTS INTO THE PROPERTY MARKET?
One of the government’s objectives is to create jobs and mitigate unemployment, and they have been quite successful in doing that. This will improve affordability. The government is also creating opportunities for investors and developers through its infrastructure projects. These mega projects, coupled with the right environment, will drive continued growth across Egypt’s property market in 2021.
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