Egypt’s real estate scene is expected to flourish in the medium term once the current uncertainties are removed and investors have a clearer idea of where Egypt is heading under President Mursi, a report said.

 

The tourism sector in Egypt is gradually improving with the number of tourists (4.4 million) increasing by 29 per cent January-May 2012 compared to the same period of 2011. However, tourist numbers remain about 25 per cent below the first five months of 2010.

 

The market has witnessed an increase in demand for office space, mainly on the east side of Cairo (New Cairo & Maadi), said the  Jones Lang LaSalle report. It said it is aware of approximately 70,000 sq m of current potential demand for new office space.

 

There has been a further decline in Prime office rents in Q2 2012, with rents in the only Grade A building in Central Cairo (Nile City Towers) declining around 5 per cent to $42 per sq m per month.

 

There has been a major shift from high-end luxury villas to apartments aimed at middle income earners within gated compounds over the past two years, as this sector was previously under supplied. Major developers such as Palm Hills Development (PHD) and 6th of October Development & Investment Company (Sodic) have led this shift towards mid-priced apartments, the report said.

 

Despite Egypt’s recent challenges, the supply of mall based retail space in Cairo has continued to increase with new openings over the past two years including Sun City Mall and Mall Of Arabia.

 

There were no completed retail projects in Q2 2012, but confidence is returning to the retail sector, with a number of new projects expected to complete over the second half of the year.

 

Although the limited supply of good quality retail space in Greater Cairo should have resulted in strong competition and rental growth, the economic and security concerns stemming from the recent instability have had a negative impact on retail spending and have resulted in average asking rents for regional and super regional malls declining by 20 per cent - 30 per cent over the past year.

 

There has been strong growth in tourists from Eastern Europe over the first half of 2012 with visitors from Russia increasing by 80 per cent and Poland by 66 per cent. These increases have been generated through additional promotional efforts and the exemption of visa fees for some countries.

 

With increased tourist arrivals over the first half of 2012 (up by 26 per cent over same period of 2011), the Cairo hotel market is starting to recover but performance remains well below the levels seen in 2010, before the revolution, it said.

 

Occupancy rates have started to recover and currently stand at 49 per cent (YT June), a significant improvement on the 38 per cent recorded during the same period of 2011, the report said. - TradeArabia News Service