According to the latest JLL report on Cairo’s real estate sector, despite a slowdown in Q2, the residential market performed comparatively well on an annual basis.
“The real estate market in Egypt continues to benefit from the various initiatives that have been put in place by the government across all sectors. We anticipate this to continue driving demand and attract international investments in the mid-to-long term,” said Ayman Sami, Country Head, JLL, Egypt.
Around 35,000 units are currently under construction and are expected to be completed in the second half of the year. In order to attract new developers and investors in the long term, the Central Bank of Egypt (CBE) has reduced interest rates by 3%, the lowest rate since 2016, with the aim to support and finance projects through bank loans rather than relying on off-plan sales.
Retail
Primary and secondary rents in the retail market have increased by 5% to 10% annually. These are expected to remain stable with mall operations gradually getting back to normal. Landlords continue to offer incentives to support tenants that include waived service charges and rent-free periods. Some landlords have also adopted a revenue-share model to support retailers to account for the loss of sales. E-commerce is still on the rise as consumer preferences lean towards online shopping, allowing for a prominent number of home-grown businesses to emerge.
Office
The office market in Cairo will continue to be a two-tiered market and while the demand is high for smaller fitted-out primary office space, the requirement for flexible office space is expected to witness a slowdown in the short-to-medium term. This is due to small-to-medium enterprises (SME’s) and start-ups now realizing they can work from home.
The government continues to support the sectors most impacted by the pandemic with initiatives such as allowing corporates to pay income tax in three installments rather than one.
Hotel
In light of travel restrictions, the hotel market witnessed a significant decline as occupancy levels registered 42% in the YT May 2020, the lowest rate registered since 2013.
In a move to soften the impact on the hospitality sector and boost domestic tourism, the government allowed hotels to reopen to local tourists in May and operate at 25% capacity - provided the properties comply with strict precautionary guidelines. The government has also committed part of the USD 2.7 billion emergency support loan granted by the International Monetary Fund (IMF) to the hospitality sector, to support the sector further.
Join Cityscape Intelligence live at the Cityscape exhibition in Egypt, 4-7 November at the EIEC. Register here