Despite the ongoing economic challenges across the globe, the residential sector in Cairo, Egypt, continues to thrive, underpinned by a young population base, said a report.

The composition of Egypt’s population continues to be one of the principal contributors to the country’s potential for a thriving residential sector, with more than half of the population under the age of 25, according to global property consulting firm CBRE.
 
When combined with the recent increase in the number of marriages, demand has further strengthened, it stated.

Egypt’s short- to medium-term economic outlook shows slowing GDP growth, with 2015/16 projections cut from 4.5 to 3.8 per cent by the World Bank reflecting limited business activity, foreign exchange shortages and a declining tourism industry, stated CBRE in its Q4 2015 Cairo MarketView.  

It is estimated that the gap between supply and demand in 2015 is a shortfall of 125,000 units, with demand in the city across low to high income groups reaching 225,000 units, said the report.

However, there is a heavy weighting towards housing requirements for those in the low income groups, with this segment comprising 51 per cent of the total, while the high income requirement is much lower at just nine per cent of the total, it added.

"Apartment rental rates of medium to high grade stock in the satellite city of New Cairo have experienced steady growth with a two-bedroom unit priced at $1,225 per month in late 2015, up by around 4.75 per cent year-on-year," remarked Mat Green, the UAE head of research and consulting, CBRE Middle East.  

"In comparison, average apartment rents offered in 6th of October City are significantly lower, with a typical variance of between 30 to 40 per cent recorded during the period 2012 to 2015," he added.
 
On average, a two-bedroom apartment in 6th of October City was priced at $715 per month in 2015, which is down around 10 per cent year-on-year.

According to Green, there is less of a variance between these two locations when pricing villa accommodation for rent, although New Cairo City remains the more expensive area.

Three-bedroom villa rents in New Cairo have risen year-on-year since 2013 and are now priced at an average of $3,380 per month, which is an increase of four per cent year on year.

The average rents for a three bedroom villa in 6th of October City have now reached $2,500 per month.
In terms of capital values, there is only a marginal variation in apartment prices between New Cairo City and 6th of October City, with rates in 2015 priced at $1,225 and $1,190 per sq m respectively, according to CBRE.

However, villa sales prices vary considerably between the locations of New Cairo City and 6th of October City with a price variation of almost 100 per cent in 2015.

At $2,560 per sq m, New Cairo City is the most expensive location for three bedroom properties. The price of villas - on a per sq m basis - remains significantly more expensive than that of apartments, often reaching double the rates, it stated.

On the retail sector, CBRE said leading developers and investors from the GCC continued to show a tangible interest in the Egyptian capital.

The total stock of regional and super regional shopping mall retail space in Cairo surpassed one million sq m during 2015, with a 20 per cent year on year growth rate.

"Retail is viewed as a key growth sector, with significant future expansion potential, with demand driven by a large youth population - around 60 per cent of the Egyptian population are under the age of 30," explained Green.

The emergence of a more affluent middle class and a growing acceptance of modern retail concepts are also key drivers behind this growth. With this in mind, an additional one million sq m of space, doubling the current stock, is expected to completed over the next two to three years," said Green.

Average retal space rents are currently around $1,400 per sq m and these are forecasted to remain stable through 2016, he added.

On the office sector, CBRE said the Grade A commercial office space continues to grow in key satellite locations to the East and West of Cairo.  

New developments are starting to meet the standards and expectations of multinational occupiers, primarily in the business districts of New Cairo City, where approximately 40 per cent of the total supply is currently located, said the CBRE in its report.  

"New office supply that is due to be completed in the coming 24 months is minimal at just 60,000 sq m.  However, there is a large amount of space expected to enter the market during 2018, if planned construction timelines are achieved," stated Green.

Average rentals for leading Grade A projects remain stable, typically quoted between $260 – 310 per sq m in the New Cairo City Area, while prime buildings in Central Cairo overlooking the Nile river are achieving up to $420 per sq m. Rents in 6th of October City remain lower at $215 per sq m, stated the property expert.

Current headline vacancy rates across all office gradings (A-C) in 2015 were approximately 33 per cent, a rate which has risen steadily since 2012.

“As the pipeline of new stock entering the market slows during 2016, vacancy rates are expected to reduce at a marginal rate, as demand starts to absorb space within newly completed buildings,” added Green.-TradeArabia News Service