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JLL explores mitigation strategies for Egyptian real estate success

Article-JLL explores mitigation strategies for Egyptian real estate success

Cairo city evening aerial view
A recent JLL event explored how Egyptian real estate companies can adopt mitigation strategies to combat the country's turbulent economy.

A recent event titled "Thriving in Turbulent Times: Effective Mitigation Strategies for Real Estate Success" took place in Egypt. The event, hosted by JLL addressed real estate success strategies amid Egypt's shifting macroeconomy. To do so, the event brought together industry professionals to discuss new mitigation strategies.

THE STATE OF EGYPT'S ECONOMY AND EGYPTIAN REAL ESTATE

Egypt has experienced several economic crises in recent years. Global shocks have also affected the country's fiscal stability. Yet, the real estate industry is seeing a change in mindset, resulting in new trends.

As demand for residential rentals in Cairo increases, there is a projected rise in rent. Occupants are also choosing modern Grade A office space. Equally, the government's tourism investments have caused a recovery in the hotel industry. For example, revenue per available room (RevPar) rose by 122% from January 2022 to December 2022.

The Egyptian pound devalued twice last year, with a further drop in January. This caused Egypt's built environment to experience the shocks of the economic crisis. Therefore, mitigation methods are necessary to help companies protect themselves.

MITIGATION STRATEGIES NEEDED FOR EGYPTIAN REAL ESTATE FIRMS

During the event, industry experts expressed a need for recovery via productive outcomes and mitigation techniques. They recommended addressing core steps such as outsourcing services to reduce costs. But they also expressed the importance of company finances. This included the reevaluation of balance sheets, financial positions, and cash flow to attract foreign investment

Sustainable development should be a significant strategy to consider. But also portfolio diversification and mergers and acquisitions are strong strategies too. These not only save money in the long term, but they also attract foreign investors and tenants.

THE NEED FOR EFFECTIVE REAL ESTATE PROJECT MANAGEMENT

According to JLL's Ayman Sami, in challenging times, some people believe real estate can offer a hedge against inflation. Yet, the present economic troubles have influenced the sector. This expresses the need for strong mitigation via cost and portfolio management, as well as risk allocation. These methods will allow the sector to adapt to shifting market dynamics. But they will also attract extra foreign investment.

Program management is becoming even more crucial. Businesses should seek the help of Project Management Consultancy (PMC) organisations with cost and project management experience. They should also be adaptable and propose creative suggestions that use project management tools and processes.

According to Mohamed Nabil of JLL, project management consultancies are critical. They help real estate companies assess risk during times of economic instability. He noted that there are some key factors that companies should consider. These include setting appropriate project budgets, development phasing, and controlling costs. He also conveyed the importance of finding the best procurement routes and implementing BIM in the design and construction phases.

 

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