JLL expects a rapid recovery of the Egyptian real estate sector with the support of the asset privatization program

JLL, which specializes in real estate management and real estate investments, said that the reactivated privatization program in Egypt, which aims to inject foreign direct investment into the Egyptian economy, will stimulate construction activities and accelerate the recovery of the real estate sector in Cairo in the coming years.

The company added in its latest report entitled “Review of the performance of the real estate market in Cairo during the first quarter of 2023” that the government aims to double the role of the private sector in the economy to reach 65%, in addition to attracting $40 billion in private investment by 2026. .

This step is expected to stimulate attracting new investments from a group of regional and international investors to mitigate the ongoing challenges facing the macroeconomy, and to ensure the stability of foreign exchange rates, which will pave the way for increasing occupancy levels and investment activity across various segments of the real estate sector, including residential units. retail outlets, hospitality sector and commercial office space in the coming years.

Ayman Sami, Head of JLL Egypt Office, said: “The expected influx of foreign direct investment will enhance the level of optimism, and is expected to ease pressure on real estate activities throughout the Republic, especially in the capital, Cairo. government and extending construction deadlines to mitigate the current challenges faced by the real estate sector, and enable stakeholders to weather economic headwinds.”

Positive outlook for the hospitality sector

She stated that the good increase in the levels of tourist influx; increasing capital spending on infrastructure projects and tourist attractions; The increasing presence of international hospitality brands indicates a positive outlook for the hospitality sector in Cairo.

In the first quarter of 2023, the current market supply of hotel rooms in Cairo remained stable at 28,000 rooms, and it is expected that the Egyptian capital will witness the completion of about 900 rooms during this year.

Hilton’s plans to double its portfolio of projects in Egypt over the next three to five years highlights the way major operators view Egypt’s hospitality sector as an investment opportunity.

This year, the hospitality giant is expected to open two hotels, including the first Waldorf Astoria hotel in Heliopolis, Cairo.

There is no doubt that the depreciation of the pound played a role in attracting tourists, and the republic is expected to receive 15 million visitors this year, an increase of 28% over 2022.

The government’s concerted efforts to support tourism by enhancing connectivity and infrastructure, in addition to announcing the availability of a 5-year visa for 180 nationalities, resulted in a 34% increase in the number of tourists visiting Egypt during January and February only of 2023. .

Occupancy levels in Cairo recorded 74% in February 2023 compared to 62% during the same period last year, while average daily rates jumped 19% to $135 and revenue per available room increased by 40% to $100 during the same period.

Negative effect of the high cost of construction

About 4,000 housing units were added during the period from January to March, bringing the total current supply in the market to 249,000 units. More than 29,000 new units are expected to be added by the end of the year, while increases in construction costs are expected to delay the completion of projects and limit launching new projects.

The rental market in 6th of October City witnessed an increase of 11% year-on-year in the first quarter of 2023 and there was an increase of 8% in New Cairo rents.

Average office rents in Cairo recorded a decline of 1% on an annual basis in the fourth quarter of 2022 to $ 358 per square meter annually – but it rose in pounds – and demand among multinational companies and new entrants to the market was weak during the three-month period, which led to The vacancy rate rose to 13%.