Cairo's satellite cities house price boom amid economic uncertainty
Property prices in Cairo’s two large satellite cities rose by 8 percent at the beginning of 2013, amid wider economic turmoil and Egypt's ongoing battle with high inflation.
Sale-price rises in New Cairo and 6th of October City are “largely due to developers seeking to pass on increases in construction costs to end buyers,” according to a report issued today by Jones Lang LaSalle.
The real estate firm, which measured villa and apartment prices in the two areas, said the 8 percent price rise was felt in the first three months of this year compared with the last quarter of 2012.
Asking prices for apartments in New Cairo rose by 4 percent to $1,180 per square meter, while villa prices rose by 9 percent.
The 6th of October area saw apartment prices rise by 8 percent to an average of $1,071 per square meter, with a 7 percent hike in villa costs.
Rental costs remained stable in both areas, however, with average apartment rates in New Cairo level at $1,000 per month.
Egypt is currently grappling with soaring inflation among other economic woes. The government is currently in talks with the IMF to secure a $4.8bn loan.
“High inflation will make it more difficult to reduce subsidies and increase taxes as required by the IMF,” said Jones Lang LaSalle in its report.
“These challenges have overshadowed the Cairo real estate market which has seen further delays in both construction and leasing commitments during the quarter. Despite these uncertainties, there remains ongoing demand, with Q1 seeing a number of significant leasing transactions in the office market and the launch or commencement of new residential and retail projects.”
Cairo’s hotel market “continues to slowly recover” since the revolution hit Egypt’s tourism industry, the report noted.
“[Hotel] occupancy rates currently stand at 51 percent in January 2013, showing a 5 percent increase compared to the same month last year… Hotels in Central Cairo are adopting a number of strategies to increase occupancy levels, including discounting room rates. Despite improving occupancies, the average daily rates in January have declined by 7 percent compared to 2012, falling from $54 to $50.”
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