Affordable housing in Cairo will be a strong emerging segment
Jones Lang LaSalle, the world's leading real estate investment and advisory firm, predicts a positive medium to long term outlook for the Cairo real estate market despite the current challenges following Egypt’s recent political upheaval.
Despite the negative short term economic impact of the recent revolution, Egypt’s economy will continue to grow. In the short term, real estate activity in Cairo will remain depressed due to the on-going uncertainties dominating the post-revolution period. 2011 could therefore represent something of a ‘lost year’ with decisions to lease or purchase real estate delayed until the ‘dust settles’ and greater certainty returns to the market after the elections later in the year.
“Irrespective of the recent developments, the basic fundamentals of the Cairo real estate market have not changed and looks positive for the medium to long term. Egypt could emerge stronger eventually through greater transparency and business friendly policies. Such a scenario could make the country more attractive for business in the long term in comparison to the pre-revolution period. Local demand will remain a strong driver for real estate growth as normalcy returns with restoration of peace and security across Egypt”, commented Ayman Sami, Head of Egypt Office, Jones Lang LaSalle MENA.
Although H1 2011 is expected to remain subdued, some sectors are expected to experience positive moment towards the end of the year.
Egypt’s tourism and hospitality sector, critical to the country’s GDP, has historically proven resilient in the face of political violence and could be the first to rebound.
While economic uncertainty and issues around the legality of title deeds will limit transactions in the residential sector over the short term, the fundamentals remain strong with an undersupply for lower and middle income households.
In the office sector, leasing activity is expected to regain momentum later in 2011 on the back of increasing availability of higher quality new supply and lower rents.
Although the recent unrest has temporarily decreased retail spending, most retailers are resuming their long term plans – albeit with caution – to market entrance and expansion.
“Egypt was and will remain as one of the most attractive real estate markets in the MENA region in terms of its potential long term opportunities, growth and diversity. The Cairo market is the flag bearer of the country’s real estate industry and will lead the road to recovery when existing uncertainties eventually settle down. In the present climate, there remains (albeit reduced) liquidity in the system and those opportunistic investors currently active in the market could be rewarded by an ability to negotiate more attractive deals than those available at the end of 2010 before the recent unrest”, concluded Ayman Sami.