Egypt’s real estate market witnessing robust demand -Fitch
Fitch Solutions sees robust demand in real estate sector fuelled by new developments, office space: Egypt’s introduction of 20 new city developments and upgrading existing 23 cities is fueling demand on Egypt’s real estate sector despite the impact of the covid-19, Fitch Solutions said in its 3Q2020 real estate report (paywall). This demand has mainly been fueled by office assets sought after by banks and financial institutions and for which Cairo remains an epicentre, especially in the New Cairo area. Rentals in Cairo are projected to see rates climb by over 13%. But even with growth, there has been a slowdown, observed by industry experts who spoke to Fitch.
New cities driving higher rents: Mega projects on the North Coast could drive up Alexandria office rental prices after years of moderate demand and limited supply that kept the rental rates in check. New Alamein is particularly interesting for real estate investors as it could raise rental rates in 2020 by 7.7% to an average of USD 14.6/sqm.
Office space driving growth in Greater Cairo: Demand for office space in the Greater Cairo area remains strong, with Sheikh Zayed being the most attractive. While outdated buildings in Giza push away prime office seekers, demand is great from occupants who seek lower prices for quality supply compared to Alexandria and Cairo.
Fitch expects the demand for residential housing to slow down, mainly as the EGP is expected to depreciate and purchasing power decreases. Only 10% of housing is supplied by real estate developers and they are mostly focused on mid to high end developments and have been unable to exploit pent-up demand, despite a growing population, increasing urbanization, and high marriage rates.
Industrial development is on the rise: Industries and local manufacturing “are soaring,” according to the report. Meanwhile, the Suez Canal Economic Zone will become a focus for infrastructure development in Egypt, as more and more investors flock to strategically build their plants in the zone close to logistics and export capabilities with continued government support, it added.