Egypt property market soars despite economic strain

A Jones Lang LaSalle (JLL) report revealed that sale prices in Cairo’s upscale residential areas of the Sixth of October City rose by 175 percent (Y-o-Y), while New Cairo saw a 180 percent (Y-o-Y) rise in the second quarter (2Q) of 2024.

The report added that rental prices also surged, with New Cairo experiencing a 122 percent increase and the Sixth of October City a 101 percent rise.

Several brokers have confirmed to Ahram Online (AO) that rent prices in mainstream districts have also peaked, with at least 50 percent increases.

Concerns over a possible property bubble – a term used when properties are overpriced – have widely been ruled out by Prime Minister Mostafa Madbouly who believes that prices are unlikely to decline as there are grounds for its hike.

Safe haven

Several factors contributed to the surge in property prices. The most important among them is the devaluation.

In March, Egypt completed its fourth devaluation in two years when the pound lost almost two-thirds of its value.

This prompted an increase in the benchmark construction rates by 20 percent, according to the JLL Construction Market Intelligence report, in 1Q.

Despite slowing down for five consecutive months as recorded in July, a double-digit inflation rate remains high.

Egyptians have invested in real estate as a safe haven and a hedge against currency instability.

“We have a unique market where people buy when prices increase, as they fear prices may climb further. On the other hand, sellers often hold off on transactions if they can afford to wait, as the market predominantly operates on cash rather than financing,” Ayman Sami, country head of Egypt at JLL, told AO.

To ease buying amid this hike, developers have offered extended instalment plans of up to 10 years to make acquiring properties more appealing.

Real estate business consultant Muhammad Khattab told AO that speculators, trying to benefit from this hype, have also led to a false demand and consequently price hikes.

A diverse demand
 

Egyptian expats, seeing an opportunity due to the exchange rate, have also been actively buying properties.

“I was already on an instalment plan for a property, but after the recent devaluations, I was able to buy another one for almost the same monthly payment,” Ahmed Adel, an engineer living in the United Arab Emirates, told AO.

According to official statements, foreigners have also kept the market high with Egypt hosting as many as nine million foreign citizens.

“First we had Iraqis then Syrians who were mostly buying in new cities like Sixth of October, New Cairo, and Madinaty. With the latest wave of Sudanese, they pushed rent prices up, especially in the mainstream district,” Ali Khodeir, a local broker, told AO.

Since the start of the war in Sudan in April 2023, hundreds of thousands of Sudanese have fled to Egypt seeking shelter.

“Families have flocked into apartments and are ready to pay high rents. This is particularly true in some areas of Cairo such as Faisal, Nasr City, and Mohandessin. However they do not impact compounds or new cities,” Ahmed Lotfy, a real estate expert and investment specialist, explained to AO.

Although developers and the government have also been trying to market Egyptian properties abroad, especially in the Gulf countries, AO could not obtain any data regarding the number of foreign acquisitions in the country.

Market outlook, developments
 

JLL’s recent research presents an optimistic outlook for Egypt’s residential real estate sector.

The report noted that 2,200 residential units were added in Cairo in 2Q, bringing the total stock to about 278,000.

Moreover, it expects around 22,000 units to be added in 2024's second half.

Construction projects are ongoing, especially in the New Administrative Capital, Six of October, and New Cairo.

According to the Mordor Intelligence report, the real estate market is evaluated at $20.02 billion in 2024 and is expected to grow to $33.67 billion by 2029.

Despite the positive outlook on the real estate market in Egypt, developers are still weary because of the market uncertainties, which led to a selective approach to launching new projects and managing costs.

Research indicates that despite market stabilization in the second quarter, future project launches may experience delays.