Occupancy rates climb to 60% in Cairo’s hotels within 5 months: JLL

Daily News Egypt
5 Min Read

The second quarter (2Q) of 2022 saw the hotel sector in Cairo’s occupancy rates climb to 60% in the first five months of 2022 — almost double the level recorded in 2Q 2021, which stood at 32%.

Meanwhile, the total stock remained unchanged due to a lack of project completions during 2Q.

Furthermore, almost 600 keys are expected to be delivered by the end of the year, according to JLL’s 2Q 2022 Cairo Real Estate Market report.

The report also highlighted that — despite harbouring a fairly limited supply pipeline for the remainder of the year — the sector is attracting interest from international operators, which could lead to new project announcements across the city.

Additionally, the completion of the construction of the Grand Egyptian Museum (GEM) in September this year, coupled with the government’s concerted efforts to boost tourism in the form of visa reforms and marketing campaigns is likely to pave the way for an influx of tourists and investors in the years ahead.

“The Egyptian government’s ongoing efforts to boost inbound tourism, contain inflation, and strengthen its focus on high-value markets in Europe and the US are reflected in the hotel industry’s sturdy growth levels. We anticipate that all segments within the real estate market will benefit from the positive sentiments fostered by these initiatives, further resulting in an improvement in domestic demand while attracting a flow of sizeable foreign investments in the years to come,” said Ayman Sami, JLL’s Country Head for Egypt.

In contrast to 1Q, the office space segment observed over 80,000 sqm of floorspace being delivered in 2Q, which brought Cairo’s total office stock to approximately 1.8m sqm. This is in addition to almost 170,000 sqm of office gross leasable area (GLA) slated to be completed in the second half (2H) of this year.

Although there was a visible increase in inquiries for office floorspace in the capital, few translated into transactions owing to the uncertainty stemming from the recent devaluation of the EGP and inflationary pressures.

This also prompted landlords to increase rents to help manage cash flow and liquidity issues while sustaining business activities, consequently leading occupiers to seek smaller fitted-out units to reduce operational costs.

Furthermore, the demand for flexible working and co-working spaces continued to gain traction owing to the growth in start-ups, freelancing, and the adoption of ‘work-from-anywhere’ policies by some corporates, further propelling a number of major flex-space operators to announce expansion plans in the city, the report said.

“Average asking rents rose by 3% y-o-y to nearly $340/sqm/annum in Cairo. Meanwhile, the capital’s office vacancy rate increased marginally to 10% — up from 9% in 2Q 2021 — and saw no change from the preceding three months,” the report read.

Meanwhile, the residential sector, which saw an increase in overall prices and rentals in the capital, was notably driven by the apartment segment. 2Q 2022 saw the completion of approximately 4,000 residential units, bringing Cairo’s total stock up to 234,000 units, and in terms of upcoming supply, almost 16,000 units are expected to be delivered in 2H 2022.

Within the retail sector, no new projects were released in 2Q; as a result, Cairo’s total stock remained unchanged at almost 2.9m sqm of GLA.

Although over 220,000 sqm of retail space is anticipated to be completed in 2H 2022, operational delays are expected owing to the current scenario, impacting the pipeline of projects.

In annual terms, retail rents across primary and secondary malls increased by 1% on average in 2Q 2022, however, over the same period, vacancy rates decreased marginally to 10%.

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