Cairo real estate market has maintained a steady performance and improved sentiment in the Q3 2015 due to positive macro environment in Egypt, according to Ayman Sami, Head of Egypt Office at JLL MENA.

In its third quarter (Q3 2015) Cairo Real Estate Market Overview report that assesses the latest trends in the office, residential, retail and hotel sectors, JLL said there is increasing confidence in the Cairo real estate market.

Sami said that constructive efforts by the government to boost the economy and investor sentiment have resulted in a 'market pull' scenario, which is attracting many developers to launch new projects.

“This positive environment is clearly demonstrated by the completion of major real estate projects including New Cairo and New Suez Canal. Overall, the outlook for all real estate sectors look good in the fourth quarter of 2015 and beyond,” he said.

“With the devaluation of the Egyptian Pound, there is a marked decrease in sales prices of apartments and villas in New Cairo, which is resulting in increased transactions. This aspect along with lower rental values has infused positivity into the Cairo residential market. However, shortage of affordable housing still remains an issue but the good news is that new government initiatives are starting to address this critical gap in the market,” he added.

According to the findings, the office market has performed exceptionally well over the past quarter.
The improved economic conditions and the willingness by tenants to relocate to more organized and efficient workspace has created increased demand for office buildings.

As a result of this strong take up, vacancy rates have fallen in JLL's monitored basket to 26%.

“The most significant trend during Q3 has been the return of rental growth in west Cairo for the first time in a number of years,” said Sami.

No new developments or major new phases were completed across the residential market in Q3, with only minor additions in the supply in Rehab and Cairo Festival City.

The devaluation of the Egyptian Pound has resulted in a decrease in sales prices of apartments and villas in New Cairo, as well as apartments in 6th October.

The only exception was for villas in 6th October, where the shortage of new supply has resulted in a modest price increase (3%), despite the currency devaluation.

In the retail segment, Q3 2015 witnessed the opening of Mirage Mall in New Cairo and the completion of a further 8,000sq m of retail within Cairo Festival City.

No further projects are due to be delivered in the rest of 2015 as construction delays continue.

“The opening of Mirage Mall in New Cairo and the completion of a further 8,000sq m of retail within Cairo Festival City has resulted in unchanged vacancy rates in existing retail malls, but vacancies have fallen by 5% (to 17%) over the past year. A stable environment has also opened up foreign investment, particularly from Saudi Arabia and the UAE," commented Sami.

He added that currency devaluation is also making the Cairo hotel market more competitive as costs are becoming more attractive for tourism and leisure visitors, particularly from the dollar pegged Gulf Arab countries.

“This has resulted in diversion of the local tourist industry from Russia and Eastern Europe, along with a 7% year-on-year increase in tourist arrivals,” he said.