Jones Lang LaSalle, the world?s leading real estate investment and advisory firm, has published its first quarter (Q1) 2012 Cairo Real Estate Overview report. In summary it concludes that it remains a challenging time, however clarity is returning to the Egyptian market. The general outlook continues to be cautious but optimistic on the long term fundamentals of the Cairo real estate market as demand exists across a number of sectors. Much depends on the outcome of the current political process and the forthcoming Presidential elections.
Among the signs of improving sentiment over Q1/2012:
- The first Cityscape Egypt took place in late February with the participation of most of the major real estate developers and the announcement of several new projects by developers including the Amer Group.
- While many development projects have been delayed, there are a number of major projects near completion. Cairo Festival City will deliver its first office phase in mid-2012 and Damac is looking to open its retail and office project opposite Dandy Mall in 2013.
- Construction has recommenced on a number of projects that had previously been suspended (eg: Qatari Diar?s major mixed use development on the Nile Corniche).
- The residential sector has seen returning confidence and increased sales activity. SODIC has recently announced that several future stages of their West Town project have now been ?Sold Out? off plan
- Tourist visitors to Egypt have increased by 40% in the first quarter (compared to Q1 2011), providing a major boost to the Cairo hospitality sector.
- There remains active demand for up to 10,000 sq m of office space from international occupiers, although many of these groups have scaled back their requirements in light of portfolio optimisation strategies and delayed decisions until after the results of the presidential elections are known.
- Retailers continue to open new stores with recent examples including Go Sport who signed the contract for their first store in Egypt at Dandy Mall. First IMAX cinemas has also signed a contract to open in the Sheikh Zayed neighborhood by 6th October. Many local retailers have continued to take new units in street front locations.
Whilst clarity maybe returning to the market, the Egyptian economy has not yet recovered from the impact of the 2011 revolution. Real GDP grew by just 1.8% in 2011 and is forecast to grow by even less in 2012, with IHS Global Insights revising its 2012 forecast down to just 0.8%. However stronger growth of 4.8% is forecast for 2013.
?Despite further meetings between the government and the IMF, final approval for the proposed USD 3.2 Billion loan to Egypt has yet to be received.
?The Central Bank of Egypt has announced that for the first time since the revolution foreign reserves increased by $100 million in April to reach $15.2 Billion.
?Tourist numbers increased by 40% over Q1. While tourist arrivals to Egypt decreased in January, February recorded an increase of 257% compared to February 2011 with the number of tourists exceeding 750,000. This trend continued in March with tourist numbers up 73% on the corresponding month last year.
Property tax could be introduced in July. The Ministry of finance announced that the property tax law had been revised and sent to the parliament for approval. As part of its effort to attract capital repatriation from Egyptians living abroad, the National Bank of Egypt announced US Dollar savings certificates with attractive interest rates. The accounts are now available for countries in the Gulf area and are likely to be extended to other countries later in the year.
There has been positive feedback on the land sales program to overseas Egyptians. In March the Ministry of Housing announced the release of 8,000 land plots in new cities around Cairo for Egyptian citizens living abroad. 350 reservations were received with some down payments having already been transferred.
About Jones Lang LaSalle MENA
Across the Middle East, North and Sub-Saharan Africa, Jones Lang LaSalle is a leading player in the real estate market and hospitality services market. The firm has worked in 35 Middle Eastern and African countries and has advised clients on more than $ 1 trillion worth of real estate, hospitality and infrastructure developments.
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