In Egypt, real estate prices jumped up to 45% in a year as tourism gains drove the property market.

Egypt, Cairo’s hotel sector, is showing vital signs of recovery, as tourist arrivals are expected to reach 15 million by the end of 2023, according to JLL’s Cairo Real Estate Market Overview Report for Q3 2023. The report reveals that the occupancy rate in Cairo increased to 68 percent in August 2023, up from 61 percent in the same month last year. The Revenue Per Available Room (RevPAR) also rose by nearly 8 percent to around $95, despite a slight drop of 3 percent in the average daily rate (ADR) to $144 for the year to August 2023.

The tourism sector in Egypt is bouncing back from the pandemic, as it is projected to surpass 11.7 million visitors in 2022 and 13.1 million in 2019. Moreover, the report highlights the growing interest of major developers and operators in Cairo and Egypt as they launch new projects that enhance the resilience and diversity of the market.

The real estate market in Cairo is witnessing a boost from the tourism sector, as Egypt expects to receive 15 million visitors by the end of 2023, according to JLL’s Cairo Real Estate Market Overview Report for Q3 2023. The report also highlights the new projects and partnerships attracting major developers and operators to Cairo and Egypt.

Some of the notable examples are:

• SODIC and Nobu’s partnership to launch the first Nobu Hotel and Residences in West Cairo.
• Hilton Group and City Edge Development’s collaboration to establish two new hotels in Cairo – the DoubleTree by Hilton Maspero Triangle Towers and the Hilton Magra El-Oyoun, which are expected to open in 2026 and 2028, respectively.
• The addition of almost 600 new keys to the hotel stock in Cairo which remained stable at around 28,000 keys for the third quarter in a row.

Ayman Sami, Country Head, Egypt at JLL, said: “Egypt’s impressive reception of approximately 7m visitors in the first five months of 2023 has renewed vigor into Cairo’s real estate market. This surge in tourism, combined with the roll-out of progressive laws, promising project pipelines, and a growing emphasis on sustainability and innovation across sectors, paints a compelling portrait of the transformative journey ahead, paving the way for increased inward investment in the country.”

The residential segment also showed growth despite the rising prices due to the fear of further devaluation. Moreover, the Egyptian government approved a new law in July that allows foreign individuals to own residential properties in the country, offering conditional citizenship and other incentives to buyers. This law is aimed at increasing the inflows of foreign currency and facilitating investments.

The residential market in Cairo is attracting more foreign investors, especially from the Gulf countries, who are interested in new investment opportunities or buying residential properties in Egypt for secondary residences or holiday retreats. The Egyptian government has approved a new law that allows foreign individuals to own residential properties in the country and offers them conditional citizenship and other incentives.

The residential developers have also been offering extended and flexible payment terms and various incentives at the Cityscape event in September, which boosted the sales for some developers. The residential stock in major gated communities increased to about 262,000 units in Q3, with 7,000 units being handed over. Another 9,000 units are expected to be delivered in Q4.

The average sales prices and rental levels in the residential market have increased significantly due to the high demand and inflationary pressures in the country. The average sales prices in 6th October and New Cairo rose by around 40 percent and 45 percent year-on-year, respectively. The rental levels in 6th October and New Cairo also increased by 22 percent and 18 percent year-on-year, respectively.

The upcoming projects in the residential market are mainly focused on providing fully integrated mixed-use developments with higher ratios of green spaces to buildings. These developments aim to create a sense of community and privacy for the homeowners.

The office market in Cairo remained quiet, with no significant transactions or completions in Q3. The total office stock was around 1.94 million sq. m. of Gross Leasable Area (GLA). About 29,000 sq.m. of office floor space will be delivered in Q4.

The office market in Cairo did not see any significant activity in Q3, with no major transactions or completions. The total office stock remained at around 1.94 million sq.m. of Gross Leasable Area (GLA). However, the market is expected to see the completion of several grade-A office projects in the next two to three years, which will address the current gap between supply and demand for high-quality office space.

The sustainability trend also influences the office market, as multinational corporations increasingly seek office locations that meet the sustainability criteria. Landlords who follow sustainability standards are expected to have a competitive edge in attracting multinationals’ demand at premium rental rates. One example of this trend is the partnership between Magnum Properties and Forbes to build “Forbes International Tower,” the first zero-carbon commercial tower in the CBD of Cairo’s New Administrative Capital.

The rental rates in the office market stabilized in Q3 after some landlords had raised them in the first half of the year, expecting further currency devaluation. Some landlords even slightly reduced their asking rates as no additional devaluation occurred. The average city-wide lease rates also decreased by around 3 percent year-on-year, reaching $361 per sq. m. per annum. The average city-wide vacancy rate increased to 12 percent, up from 10 percent in the same period last year.

The retail market in Cairo did not see any new retail space being delivered in Q3 due to the slow materialization rate and delays in project completions. The total retail stock stayed at around 2.9 million sq. m., with about 88,000 sq.m. of GLA expected to be completed in Q4.

The retail market was affected by the high inflation rate of 38% in September, which reduced consumer spending and impacted retail sales, especially for international fashion brands. However, some local fashion brands that have an omnichannel presence and offer affordable and unique products showed robust performance. Moreover, new family entertainment and dining concepts also outperformed the market.

The vacancy rate in the retail market slightly decreased from 11 percent in Q3 2022 to 10 percent in Q3 2023. CapEx contributions became more limited and were offered on a case-by-case basis. Meanwhile, local landlords of regional and super-regional malls slightly increased their asking rents and became less flexible during rental negotiations, unlike international owners. This, along with the soaring inflation and the weakened local currency, resulted in average rental rates increasing by around 11 percent and 9 percent year-on-year in primary and secondary malls, respectively.

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