Annual sales prices of housing units across New Cairo and 6th October increased by 25 percent in the first quarter of 2023, with rents also increasing by 11 per cent in 6th October and eight percent in Cairo respectively, according to a new report by property consultancy firm JLL.
The rise in labor and construction costs were cited as the reason behind the increase, said the report, titled “The Cairo Real Estate Market Overview: Q1 2023".
It said that Q1 2023 witnessed the completion of 19,000 square meters of retail space and more than 4,000 residential units were delivered. Over 29,000 units are scheduled to be completed by the end of the year.
The report also pointed out that a lot of new project launches were suspended in Q1, as contractors struggled to examine options to adapt to the unstable macroeconomic climate.
Further delays in project completions or price readjustment of projects underway are likely to occur in the next few months amid upward pricing pressures. The report expects that Cairo’s residential sales market will feel the pinch as housing supply is adversely affected.
Real estate developers have been repeatedly calling for urgent and extraordinary measures to be taken to help facilitate the expeditious recovery of the property sector. That includes allowing for further extensions on project delivery timelines and partial completion of projects as well as slashing interest rates on state-owned lands by 50 per cent for a year.
In related news, in an attempt to minimize the impact of price spikes, Cairo-based Emaar Misr began in March to sell units at current price of the USD exchange rate with a cap on exchange.
Earlier this year, the Egyptian government unveiled plans to boost private sector contribution to the gross domestic product (GDP) to 65 per cent, aiming to attract USD 40 billion in private investment by 2026. Moreover, as part of its national strategy to attract foreign direct investment (FDI), it also plans to partially privatise 32 state-owned companies by March 2024.
From this, the demand for flexible office hubs has significantly gone up, the JLL report stated, adding that operators are increasingly looking to expand the concept and increase their physical footprint in Cairo. But, due to the volatile economic situation, tenants have become more inclined to seek short-term flexible leases for furnished office units.