Strong real estate sector performance underpinned by resilient economy, special demographics: Savills Egypt

Shaimaa Al-Aees
5 Min Read

Savills, a leading global real-estate consultancy, has launched its first Egypt Property Report, offering a comprehensive look at the Greater Cairo real estate market.

The report also provides an in-depth analysis of the residential, administrative, and retail sectors in the region.

Catesby Langer-Paget, Head of Savills Egypt, said, “Marking our third year in Egypt, this report will be the first of many, as this industry continues to thrive and develop.”

He added, “Globally, we release hundreds of reports annually from our 650 global offices, which real estate professionals and investors rely on for current market trends and predictions for the future to help make the right decisions.”

Langer-Paget said that Egypt’s economic expansion will moderate to around 4.5% between 2021 and 2022, but, starting in 2023, GDP growth is likely to return to its pre-pandemic rates of above 5.5%.

“We can very much see the impact of Egypt’s economic expansion on the real estate market, as the market is maintaining its position and is regarded as an attractive investment,” he added, “Also, one should note that the decrease of interest rates in the market is positioning real estate assets as the safe haven for investments across the country, driving demand for local investors, Egyptian expatriates as well as foreign investors.”

The report highlighted that the emergence of organised and Grade A developments will continue to gain popularity in the long run, as more mid-to-high end projects get delivered in the next few years.

New asset classes, such as serviced/branded residences are also gaining popularity, with this sector forecast to grow faster in Egypt than any other country in the world over the next four years.

In addition, Sherine Badreldine, Head of Operations at Savills, said that reports show the real estate market is maintaining its position and even growing in some sectors. This is the case with the residential market, where demand for units has remained strong across Greater Cairo, bringing the current residential stock to 7.1 million units.

Furthermore, following the government’s expansion vision and that of the New Urban Communities Authority (NUCA), private developers are offering a variety of large mixed-use developments across both West Cairo and New Cairo.

This has led to a strong increase in the supply of Grade A residential developments, accounting for around 1% of the total supply in 2020, she elaborated.

Badreldine added that the same applies for the office unit market, as the demand for office space remains strong, and is gradually increasing on an annual basis across Greater Cairo.

There has been a steady growth in the number of foreign corporations recently establishing their operations in the city or expanding their footprint, she noted.

Zeinab Adel, Head of Strategic Consultancy at Savills, said that the forthcoming years will continue to witness an increase in residential demand driven by population growth.

For the office unit market, the demand for office space remains strong, just as patterns of supply and demand within the key office hubs are changing, she said.

With a current office supply stock of 1.7 million sqm at the end of 2020, developers prefer to move away from Downtown Cairo and Giza towards mixed-use organised office parks.

These offer a variety of amenities and sufficient parking space in Sheikh Zayed City and New Cairo.

“Additionally, over the last decade there has also been a shift in demand towards Sheikh Zayed in the West and New Cairo in the East. The product offering has also changed towards modern investment grade and integrated developments to match the international corporates’ requirements,” the report read.

Adel concluded that the report also linked the change in the retail sector to the change in demographics due to a growing and affluent Egyptian middle-class youth.

This shift has been more prevalent in the last few years, especially in 2019, with the significant increase in the city’s retail gross leasable area (GLA). This has come alongside the handover of the Mall of Egypt and City Centre Almaza, in addition to retail strips in New Cairo and the expansion of Cairo Festival City.

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