Egypt - Market To Watch
Plans by the government to expand the boundaries of the urban area of Cairo by 100%, coupled with the influx of substantial equity from the Gulf, are set to usher in a period of intense development activity and urban regeneration.
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Opportunities in industrial sector
The industrial sector is growing rapidly, supported by government initiatives. These include a reduction in land acquisition costs, expanding transport infrastructure, new free trade zones and single-digit interest loans - all designed to spur the manufacturing sector. Average monthly rents in existing industrial cities stand at c.US$ 5 psm, equating to a rise of 8% on Q1 2020.
The increasing demand has resulted in the development of four new industrial cities, however with an apparent demand-supply equilibrium, rents have held steady.
Occupiers gravitate to new, modern office stock
The New Administrative Capital continues to draw in existing office tenants, creating challenges for landlords in Cairo who are struggling to contain rising voids resulting from this relocation activity. The situation is being exacerbated by ongoing ‘right sizing’ as occupiers develop new post-COVID occupational strategies.
More secondary offices, in the older parts of the city, are experiencing increasing vacancy levels as businesses gravitate to new, more modern stock, mirroring the global flight to quality, which we feel will continue to fuel a two-tiered market. Monthly rents in the New Administrative Capital average US$ 30 psm, while older buildings in Cairo command rents as low as US$ 12 psm.
"Larger malls have been forced to reassess their raison d'etre, with many focusing their attention on experiential and lifestyle retail."
High-rise residential towers attracting younger tenants and buyers
The residential landscape is set to experience sweeping changes as high-rise developments in new cities around Cairo draw younger tenants and first-time buyers out of traditional residential hotspots into more modern buildings, built to international specifications.
That said, rental demand in Cairo remains strong for affordable and well-located three-bedroom villas as well as 2- and 3-bedroom apartments.
Retail market remains strong
Covid restrictions have meant that neighbourhood malls have enjoyed steady and resilient levels of footfall throughout the pandemic. Larger malls have been forced to reassess their raison d'etre, with many focusing their attention on experiential and lifestyle retail in an effort to boost footfall and dwell times.