Cairo Real Estate Market Sees Impressive Performance in first Quarter of 2019

by Admin on April 30, 2019

According to a recent report published by leading realtor JLL, performance has remained quite impressive across all sectors in the Cairo real estate market, this first quarter of 2019. However, the residential sector has been a mixed bag, with sales prices gradually slowing down in Q1 2019, while rental rates have gone up on the basis of limited supply of rental property in the Egyptian capital, with more growth expected throughout the year. The office sector, on the other hand, continues to see above par growth levels, with integrated office parks found inside residential gated communities doing particularly well.

Performance Indicators in Each Sector

 

In regards to residential property supply, the first quarter of 2019 witnessed the delivery of about 4,350 residential units including Villette, Layan Residence’s second development phase, the Courtyards in the form of apartment units in the west, and Degla Lake Front in the east region, which are mostly villas. Practically all units in the Courtyard were sold off-plan to more privileged households. Another 12,500 and 46,700 units respectively are set to be handed over throughout the rest of 2019 and 2020. 

 

However, the residential sector’s performance has been somewhat lackluster, with sales prices declining marginally in the secondary market in Q1 2019. This has been largely due to reduced affordability levels within the upper echelons of the Cairo residential market.

 

The NUCA (New Urban Communities Authority) is progressing at full speed with new cities including New Mansoura, New Alamein, New Obour, New Sphinx and an entirely new Administrative Capital. Interestingly, this was announced while the government is trying their level best to introduce affordable housing in order to do away with informal housing schemes entirely.

The office sector has witnessed impressive growth levels with integrated office parks inside gated communities performing quite well. In regards to supply within the office sector, however, only 2,800 square meters of GLA (gross leasable area) were delivered in the first quarter, leaving the total office stock at 1 million square meters of GLA.

Supply is slated to increase within the next year with delivery expected to the tune of 23,000 square meters of office GLA, with a further 156,000 square meters of office GLA to be delivered throughout 2020.

Demand for office spaces within regional service centers is particularly on the rise – Cairo continues to act as a central hub for companies in Europe and the Middle East looking to invest. Concurrently, demand for ‘high end’ offices is also fairly high as multinationals from a variety of sectors including telecom, FMCG, e-commerce and oil & gas are looking to widen their borders and expand into new markets.  

Retail rents have remained stable for the most part in the first quarter, but have increased since last year, with additional growth expected throughout 2019. When it comes to supply within the retail sector, the current figure of 2.1 million square meters of GLA remains unchanged because new retail establishments were not delivered in the first quarter. However, 381,000 square meters of retail space will be entering the market by end of 2019, including Yard Mall, Almaza City Centre, and Madinaty Mega Mall which has already been opened partially.

It was noted that most of this future supply will be delivered in New Cairo, even though limited announcements were made for West Cairo as well. And there’s good reason for this – new developments will be delivered in areas where good quality purpose-built retail is sparse, which will certainly contribute to greater success.

East Cairo has largely been the focus of upcoming retail developments. Given the plans to create a new Administrative Capital, developers have been very confident in expanding existing as well as new projects to meet the soaring consumer demand.

The report also disclosed that sturdy growth has been seen in the leisure and tourism sector, with occupancy rates rising to 77% in Q1 2019. A number of factors have contributed to this growth including improved tourism reforms, better public relations and enhanced security arrangements.

The hotel supply in the capital, at the moment, registers at 23,300 rooms. The latest addition in the market was the St. Regis hotel in downtown Cairo which added 366 room to the hotel sector in late 2018 – no further additions have been recorded since then. Another 600 rooms will be entering the market sometime in 2019, including Element Hotel and Hilton Maadi, if development and delivery projections remain on track. 

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