Cairo real estate market witnesses strong performance across all sectors in Q1 2019
Cairo’s real estate market continued to perform positively in the first quarter of 2019 with the residential sector in particular recording significant rental increases, outlines JLL’s Q1 Cairo Real Estate Market Overview report. Strong growth and positive sentiment reflects the successful measures taken to enhance security, boost tourism and overall investor demand across all sectors.
“The real estate market in Egypt witnessed a strong start to the year with healthy demand levels and all sectors remaining in the upturn stage of their cycle. The country continues to benefit from the positive sentiment created by planned cities and projects. We anticipate these projects to not only continue driving domestic demand, but also to attract significant international investments in the months to come,” said Ayman Sami, Country Head, JLL, Egypt.
The residential sector saw a shift from sales to rentals with significant rental increases recorded on the back of limited supply of rental property in Greater Cairo. As primary sale prices reach record levels, some individuals have shifted to the rental sector, while others are moving into temporary homes awaiting the delivery of their off-plan units.
Cairo’s office sector continued to witness healthy growth levels, with integrated office parks within residential gated communities performing strongly. Demand is especially booming for flexible offices and co-working spaces, which provide tenants with a more cost and time efficient solution to setting up a business, in comparison to traditional spaces. Rents are expected to improve further in West Cairo, once the Grand Egyptian Museum, supported by the Sphinx Airport, is fully operational in 2020.
Retail rents remained stable in Q1, but have increased over the past year, with further growth expected in the rest of 2019 reflecting healthy demand across Cairo. Vacancies are expected to increase during the year, however the gradual increase in consumer spending power is likely to drive further rental growth. The creation of the New Administrative Capital has provided a stimulus for developers to expand their existing and planned retail projects, to accommodate growing consumer demand. They are increasingly offering innovative and interactive concepts, to provide an enhanced retail experience to visitors.
The hotel and tourism sector witnessed sturdy growth levels, with occupancy rates increasing 4bp to 77% in the year-to-February 2019. With Egypt hosting the African Cup of Nations football tournament, sports tourism is expected to contribute to continued strong performance in the hotel sector the third quarter of 2019.