Currency devaluation, restrictions on capital outflows, construction delays, and security concerns have reflected on the real estate market in Egypt in 2015, resulting in mixed performance across its different segments, according to real estate firm Jones Lang LaSalle (JLL) in its latest report.
“While the Cairo real estate market experienced robust growth over the first half of 2015, a combination of economic, political, and security uncertainties have taken some of the steam out of this growth and the market has generally cooled over the past few months,” head of JLL’s Egypt office Ayman Sami said. “As a result, we witnessed mixed performance across the office, residential, retail, and hotel sectors during 2015.”
The report, which evaluated the real estate sector throughout 2015, stated only 7,500 residential units were delivered in 2015 instead of the 30,000 units forecasted by developers at the beginning of the year. The company attributed the low delivery rates to “over-optimistic assumptions by developers and the slowdown in the level of pre-sales”.
The company expected these delays to continue in 2016 due to rising construction costs as a result of the devaluation of the local currency and the restrictions imposed on the importation of construction materials.
During the fourth quarter of 2015, the prices of villas remained stable while apartment prices surged by 8% in 6 October City and 4% in New Cairo.
JLL added that activity in Cairo’s hotel market remains subdued, with the addition of just one property, the Nile Ritz Carlton, with 330 rooms. The report added that only 743 rooms are in the pipeline for fiscal year (FY) 2016 / 2017.