Cairo’s real estate market on road to recovery
The year 2014 could mark the beginning of the recovery of Cairo’s real estate market, provided the progress that was made on a political front in late 2013 is continued, according to a latest report – Cairo Real Estate Market Overview Q4 2013 – which was published last week by Jones Lang Lasalle (JLL) MENA.
Although there is on-going social unrest in Egypt, there are also a number of encouraging signs of economic and political improvements. Among these positive indictors is the government’s proposed political ‘roadmap’ to stabilise the country, which includes a drafted constitution that was approved by a majority of Egyptians in a referendum last month. This has also resulted in a return of investor confidence, adds the report.
However, improvements that occurred in Q4 2013 are yet to have a positive impact on Cairo’s real estate market. Prime rents remained stable in most sectors, although small falls were recorded in the residential and retail segments.
The average sales prices in areas, such as New Cairo and the 6th of October, remained stable during the same period, however rental prices in the same areas declined, mainly due to many expatriates leaving the country because of the political unrest.
The residential sector also saw the completion of 3,200 units, while other projects launched new phases in Q4 last year, among which was real estate developer SODIC’s announcement of the construction of phase nine of its Westown project.
Significant levels of new supply entered the retail and residential markets, as several mega projects were completed in Q4 2013. The most significant completion, however, was the Cairo Festival City Mall, a development by Dubai-based Majid Al Futtaim Holding, which opened in November 2013 with the first IKEA store in Egypt. More malls are set to open in Q1 2014, among which are the District Mall and Porto Cairo Mall.
The performance of the hotel sector has remained subdued, as the number of tourists visiting Egypt declined by approximately 20 per cent in 2013. This resulted in a dip in average hotel occupancies in Cairo, which stood at 48 per cent last year. However, the average daily rates increased considerably, reaching $62 in 2013 (a 21 per cent increase from 2012).
According to the Egyptian Hotel Association, there are currently 28 hotels under construction in Cairo, of which The Nile Ritz-Carlton will open in Q1 2014.
In addition, the country’s office sector didn’t witness any completion of projects during the same period, therefore vacancies declined from 26 per cent (in Q2 2013) to 22 per cent. Moreover, no Grade-A office space was completed in Q3 2013. Prime office rents have not changed until now; Nile City Towers, located in Downtown Cairo, remains the most preferred office location, with rents reaching $35 per square metre.