Privatization + the EGP devaluation could boost Egypt’s real estate sector:
The long-term estimate for Egypt’s real estate and hotel sectors is positive as the revitalized privatization program and the weaker EGP encourage expansion within the industry, according to global real estate consultancy JLL quarterly report.
New FDI inflows from regional and international investors in the real estate sector will boost demand, the reported added
EGP devaluation is good for tourism:
According to the survey, 15 million tourists are predicted to visit Egypt in 2023, a 28% increase from 2022, due to the depreciation of the Egyptian pound, increased infrastructure, and the proposed five-year visa.
Furthermore, hotel occupancy stood at 74% in the first two months of 2023, up from 62% in the same period last year. ADRs (average daily rate) rose by 19% to $ 135 and RevPAR (revenue per available room) increased by 40% to $ 100, according to the report
Meanwhile, hotel stock in Cairo remained at 28k keys during 1Q 2023 and 900 are expected to be added by the end of the year.
Some 4k residential units were added during the January-March period, taking total stock to 249k.
More than 29k new units are expected by the end of the year but hikes in construction costs are expected to cause project delays and fewer launches.
Rental prices in Sixth of October City saw an 11% y-o-y increase in 1Q 2023 and there was an 8% increase in New Cairo.
Commercial rents inch lower: The average office rent in Cairo decreased by 1% y-o-y in 4Q 2022 to USD 358 per square meter per year (but increased in EGP terms). Demand among multinationals and new market entrants was weak during the quarter, resulting in the vacancy rate rising to 13%.
Some analysts expect office rents to fall dramatically: In a report earlier this month, Fitch Solutions forecast a 30% drop in office rents this year due to falling demand.
