The real estate market in Egypt continues to present positive growth indicators for the upcoming 2019 to 2021 period, according to Ayman Sami, the JLL country head-Egypt.
Sami noted that the market is expected to attract foreign direct investment in order to restore the international position of Cairo as a competitive and a leading real estate investment destination.
“The market currently enjoys unique flexibility in conducting business, this is especially evident in Cairo. The increased population growth, reduced inflation, and the prospect of falling interest rates have resulted in an increased demand for real estate investment. This demand is particularly noticeable in alternative real estate assets, including healthcare, education, and industries,” he continued.
In a press conference on Wednesday, JLL, a real estate investment advisory firm, revealed the key factors the firm believes will determine the outlook of Cairo’s real estate market in 2019, as well as the emerging opportunities and uncertainties that are prevailing in the market.
At JLL’s annual ‘Year Ahead’ event in Cairo, the firm highlighted that the growing foreign investor’s confidence in Cairo’s residential sector performance remained positive across Cairo’s residential sector in 2018.
JLL noted that the growth in the off-plan sector did however impact the secondary market negatively, as buyers preferred to hold off and wait to purchase off-plan units. The rental market has benefited from increased demand for temporary housing.
“Looking ahead in 2019, there is a clear direction toward a decrease in down-payments, flexible instalment plans, and an abundance of offerings in the major cities and coastal locations. In addition, Cairo is rated as one of the most competitive and stable cities in the world when compared to Paris, London, New York, Madrid, and Istanbul. This is due to competitive prices, affordable living costs, and a stable political environment,” Sami noted.
He pointed out the increase in flexible office space demand in Cairo globally–evolving demographics are shaping the office landscape and Cairo is adopting the trend for flexible office space.
Additionally, he elaborated that 75% of millennials will join the workforce globally by 2025 and 5.1 million individuals will occupy 30,000 shared office spaces by 2022. In line with this global trend, the demand for flexible office space in Cairo will increase. This is a relatively new trend in Cairo, with flexible office space representing just 0.72% of the total stock.
Part of the growth in demand for flexible office space in Cairo is the city’s emergence as the leading destination for small and medium-sized enterprises. Flexible office space is attracting special attention from owners who want to address modern work systems and short-term contracting needs, as occupiers lean more toward flexible than traditional office space, he added.
Vacancies in Cairo’s retail sector could increase during 2019 due to the level of new supply entering the market. However, rentals are also expected to increase, following its 10% year-over-year growth in 2018, according to Sami.
Concerning the hotel sector, he disclosed that it is likely to see more sales and rebranding opportunities in 2019. Moreover, the hotel sector continued its revival in 2018, with hotel occupancies recording the highest rates since 2011. The increase in in-bound tourism continues to be driven by enhanced security, increase in tourist purchasing power, and an overall recovery of the tourism sector. The year 2019 is expected to witness significant re-branding opportunities and new operator deals.
The overall tourism sector will witness further positive enhancements with significant new openings such as the Grand Egyptian Museum, and Sphinx International Airport. The new airport will reduce pressures on Cairo International Airport, facilitate internal flight traffic, and provide easy access to tourism destinations.