EGYPT REAL ESTATE KEY-VIEW 2020 - 2025

If you live in Egypt nowadays for at least the past year, it is undeniable that the streets keep looking different, and bridges appearing somewhere that had no bridges. 

Not to mention the GPS going crazy due to the intense changes in roads. The Egyptian government has been throwing gigantic investments on its macroeconomic level, in relation to its infrastructure. Not to mention the new administrative capital that had skyscrapers appear in a couple of years. 

Covid 19 may have hit the global economy with an economic recession, and most 3rd world countries should have had it worse than their developed neighbors. Yet Egypt has kept strong, in fact the demand on real estate commercial assets has been kept in stability. 

In addition to that, Egyptians are more likely to invest in Egypt's real estate market more than ever, hence the safety in regulations occurring due to the governments keeping real estate developers in check, and making sure that everything ends on time. Both the infrastructure and the government supervision, a growth in motivation occurred in real estate investors in addition to a newcomer population that has never invested before. It is definitely expected for commercial real estate to experience gain, yet in a way that will push modest rental gains across all three sub-sectors within 2021.

As such in Q321 we do expect a consistent improvement in demand for real estate throughout Egypt, pushed by a union of an optimistic economic backdrop and continual development of the country’s new cities; as such previously mentioned the New administrative Capital with appealing skyscrapers and an expected utopia, the new Alamein City, a host for who seeks prestige and the new Mansoura City. It is a fact that Covid-19 has pushed all statistics in the red since the year 2020 globally, however we do have a promising build up for the real GDP raise in the country.

Regardless, Because of a surprisingly low vaccine rollout in Egypt, we had to modify our eye view, resulting to our expectations to be at a 3% growth for the real GDP in the year of 2021 whilst a 5% growth in the year 2022, compared to our previous expectations being 3.2% and 5.2% for both years respectively.

As previously mentioned Egypt is going heavy on real estate investments, and as such Cairo is not forgotten just because the new capital is away in a few years, loads of investment activities in relation to commercial real estate are the main center of attention. 

This is being assisted by a reliable tourism sector, which pushes demand for retail facilities in Giza. After the level reduction activity occurring in the year 2020, demand was set to minor enhancement in 2021. Such increase may seem minor yet its occurring in times where reduction and red statistics should have taken place, thus activities being in the greens to begin with, is an achievement. 

Furthermore, an industrial trade connection between the Suez Canal and the rich oil and gas pipelines throughout the city for Alexandria, made Alexandria popular for industrial real estate and developments. On the other hand a need for warehouses is going upwards in stability for Alexandria, adding to that exports to sustain firm growth in the medium term. We do have a solid belief that there will be a sustainable increase in demand for industrial assets in Alexandria.

As for the administrative market, it will have its share in demand when it comes to prime developments. The demand will increase at a fair to firm rate. Thing is in a 3rd world country, an unavailability of quality exists by default, hence its a developing country. This encourages demand to increase for modern and new developments, resulting in a fair increase in demand for rentals in Cairo and Giza, while creating an increase in Alexandria too, yet less than its respective big sisters, Cairo and Giza. We do estimate an upcoming supply of fresh developments in the office market in 2021, of course at an average rate to be at the level of demand.

Egypt is forecasted to be within the bubble of solid performers in relation to the real GDP growth levels. After all the Egyptian community is a heavy consumer, and such GDP growth occurred due to such consumption growth of 5.0% in the year 2021, from a 3.5% increase in the year 2020. Previously the unexpected slow vaccination rollout that we mentioned, meant that businesses will be in a bottleneck, which results in the GDP growth not reaching any big numbers soon. However we estimate that the big gains might appear after 2022. 

By the same 2022 tourism industry is estimated to be near the times before pandemic levels. Such level of consumption will build strong demand across the three sub-sectors whilst rental levels are estimated to feel a confident recovery in Cairo, Giza and Alexandria. In addition to the fact that the Egyptian population is in gradual increase which will act as a support for a green upward path over the medium to long term in relation to rentals.

Egypt is big and as big as it is, it's not just its primary sector that is big, yet the secondary sector is intense. The industrial hubs near Alexandria and Cairo are a main strong focus for the industrial real estate market activity. 

Furthermore the conditions set in the country are favoring the landlords, which lead us to believe that the rental rates will rise in Alexandria, Cairo and Giza in the year 2021. Such conditions are partially because of the increased demand for warehouse and logistics premises. Such need for warehouses is intended to support growth for the country’s online retail market due to the online market requiring inventory more than anything, in addition to intense hopes to become a central hub in Africa.

 Fresh logistics village by Cairo International Airport will help Cairo bring brand new demand to the market. However rental rates in the near term should be limited in growth if an increase in vacancies were to occur.