Property prices in Egypt will definitely increase in the coming four months due to growing inflation and price spikes in construction materials, which in turn will force developers to increase the cost of units for sale, Catesby Langer-Paget, Head of Savills Egypt, told Daily News Egypt.
“Egypt’s real estate, as a sector for investment, has generally performed well in times of crisis,” said Langer-Paget.
He noted that the number of branded residences has increased globally, not just in Egypt. It is a global trend and we have seen that Egypt has achieved great success with branded residences in Cairo in the past. However, this type of property still represents a small portion of the upcoming residential supply.
He further pointed out: “There is demand for residential property across all price points in Egypt as the population increases by 2 million every year. That is to say, demand increases in every sector every year. Moreover, there is a great demand for commercial and administrative space from investors, both local and those living abroad, particularly in the New Administrative Capital. Additionally, the opening of the Grand Egyptian Museum will give a boost to the property market in West Cairo as well as Sphinx airport. This falls in line with Egypt’s efforts in developing and expanding within this region.”
Regarding the most promising sectors in the local market, he added: “We believe that the logistics and industrial sector is the one that is likely to see the largest growth in the short to medium term as new entrants enter the market to meet the demand for modern space.”
Concerning the second home market, he commented that this is a promising sector especially after the COVID-19 fallout, saying: “I think this sector enjoys huge and massive potentials especially in the North Coast and with New Alamein coming up. With new flexible working practices we may even start to see areas of the North Coast and Sokhna operate as first homes.”
Lange-Paget believes that more mergers and acquisitions will happen in Egypt’s real estate market in the coming period, and went on to say, “We were expecting something like the Aldar-ADQ acquisition of SODIC to happen. Moreover, we feel it is likely that we will start to see the acquisition of small developers by larger ones locally. Accordingly, we project that more acquisitions are coming in the Egyptian real estate market, which in turn will lead to more investment opportunities as new land banks are leveraged.”
The government of Egypt has paid a lot of attention to the real estate market, but there is still much to be done to regulate the local market and bring it in line with other real estate markets in the region such as Dubai and Bahrain that already have a fully functioning RERA (Real Estate Regulatory Authority),” said Langer-Paget.
Historically maintenance of properties has not been a priority in Cairo which is essential to maintaining their value. Recently, as developers focus more on commercial real estate, they have begun to invest more in providing high quality property management for retail and office spaces. In addition, after-sale and leasing services are very important to maintain property value, create a vibrant community and best service your buyers.
Regarding challenges in Egypt’s real estate sector, Langer-Paget commented that the local market needs more regulations between developers and buyers, besides the government.
He would prefer to invest in Egypt’s real estate sector because it remains strong and enjoys high demand. He added, “Historically prices have risen faster than inflation and performed well even in times of financial uncertainty. I am very positive about real estate in Egypt.”
Langer-Paget believes that COVID-19 hasn’t affected the retail sector in Egypt as much as others in other countries; everything has gone back to how it was pre-pandemic. However, there are other issues affecting the retail sector, currently, such as the difficulties of importing goods and dealing with rapidly increasing prices of fit-out costs.
“Egypt’s retail market has expanded rapidly in a very short time and is thriving within Egypt, more than any other location in the region. The retail market is headed in the right direction. As a result, demand for retail will continue to grow and well designed and managed schemes will continue to perform well.
He projected that we will see price growth across all sectors, including the retail and office sectors, but that the logistics sector will be the one to see the most growth in Egypt during the coming 24 months.
“Savills provides any consultancy service related to real estate. Our clients include major Egyptian developers and institutions, besides, major international investors. We provide them with various services ranging from property management, strategic consultancy, project management to marketing consultancy, to name a few, depending on the client’s needs. Our client base continues to increase and we don’t expect this to slow down anytime soon” he noted.
“We are very excited about COP27 which will be held on 7-18 November 2022 in Sharm El-Sheikh, South Sinai. We are happy that COP27 is coming to Egypt this year. Real estate contributes to 40 percent of carbon emissions globally, a concerning statistic for everyone driving the sustainability agenda in the industry. Climate change has gone from being a fringe issue to a global priority, and we acknowledge our responsibility to do our part and introduce change for good. We are very interested in implementing sustainable practices both within our business and for our clients,” he stated. “Accordingly, Savills aims to shed light on this and other sustainability challenges faced by the global and regional real estate sector at COP27.”
Savills Egypt participated in the Race to Zero campaign in 2021, an event hosted at the British Embassy in Cairo, where Savills Egypt pledged its full commitment to optimizing processes to reach net-zero carbon emissions by 2050, Langer-Paget concluded.