A number of new projects have been unveiled in the last two days at Egypt Property Show held in Dubai. The Egyptian developers, such as Hyde Park Developments (HPD), are trying hard to capitalize on the growing interest from the immensely large Egyptian expatriate population residing in the UAE and other GCC states after the country floated its currency.
Egyptian pound (EGP) has stabilised after a period of initial volatility and now it has turned to become a boon of the North African country’s economy.
The currency has become far cheaper than earlier to foreigners and this has led in increased interest from international investors and tourists alike.
Capital Cairo’s real estate sector has become one of the first beneficiaries of devaluation as a new economic optimism has created tailwinds across office, residential, retail and hotel markets.
After a storm comes calm
When floated, many in Egypt, particularly businessmen, believed the country’s economy will collapse when its central bank devalued local currency and let it float in November last year.
To intensify their woes, the pound crashed 50 per cent after the float and inflation has hit decade-highs. But the currency has subsequently bounced 20 per cent off lows, bank deposits are growing and remittances have jumped a fifth year-on-year in the three months after devaluation.
And Egyptian stocks and bonds – investor favourites before the 2011 Arab Spring – are luring buyers again.
The currency has now stabilized at around $1 equalling to EGP18.
The hotel and tourism industry has in particular benefited from the devaluation, as Egypt has become a more affordable destination for international tourists, according to a recent report by real estate consultancy firm JLL.
“Occupancy rates increased significantly to reach sixty nine percent in the year to January 2017 due to increased tourism activity. This comes on the back of the government’s efforts to improve airport security, as well as the development of inbound tourism from neighboring Arab countries,” says Ayman Sami, Country Head of Egypt, JLL.
Banks to drive office market
The effective increase in rental prices following the flotation of the pound affected smaller companies, some of who were forced to cancel relocation plans to grade A office space due to increased financial pressures, according to the report.
The negotiating power has shifted in favour of tenants, many of who are seeking to renegotiate their lease terms prior to engaging in long term contracts.
Banks are the most active participants in the offices sector at present, while FMCGs are negotiating their lease terms in order to reduce their market exposure. Oil and gas occupiers are generally reducing their activities due to current market conditions, but are expected to show increased demand in the medium term on the back of new field explorations, says JLL.
The New Cairo market continues to be the most active location for new office supply. Along with recently offered and under construction projects located on 90 Road, Cairo Festival City is expected to complete five new office buildings in Q3 2017 adding 60,000 square metre of grade A office space to the New Cairo supply.
Capital Group Properties (CGP) has announced a new 1,200 Feddan mixed-use community, called Smart Village East at Al Bourouj. The development constitutes residential, retail and smart office units.
Strong demand in residential market
Local demand for residential units continues to be strong through Q1 2017 and is expected to remain steady.
There has been strong interest in the first tenders from Cairo New Capital City. Over 200 companies have responded to these tenders including Sodic, Saudi Egyptian, Al Hokair and Talaat Mostafa. There have also been 16 actual submissions. This significant interest reflects the demand to acquire land for new residential projects.
Q1 2017 saw the announcement of several new projects across 6th of October City and New Cairo. Following the increase in unit prices in EGP terms, many developers are now offering more lenient and attractive payment plans to alleviate the effect of the decrease in purchasing power.
(With inputs from Reuters)