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News Release

Cairo

Cairo Real Estate Sees Positive Performance and Improved Sentiment, According to JLL Q1 2015 Real Estate Market Overview


​​JLL, the world's leading real estate investment and advisory firm, today has released its first quarter (Q1 2015) Cairo Real Estate Market Overview report that assesses the latest trends in the office, residential, retail and hotel sectors.

Ayman Sami, Head of Egypt Office at JLL MENA, commented: "All sectors of the Cairo real estate market have witnessed positive performance and improved sentiment. Significant efforts by the government to expand the economy and attract investors, including the recent Egyptian Economic Development Conference, have resulted in confidence and new investment commitments of more than USD 12.5 billion from four GCC countries. This confidence is most clearly demonstrated by the recently announced mega real estate project of the new Cairo Capital, which marks a natural long term progression to the East of Cairo. Given Cairo Capital will create a bigger magnet for business towards the East of Cairo, we expect that the West will need to reposition itself differently, and this will most likely be as a tourist and entertainment area. These trends provide great optimism as all real estate sectors should continue to benefit in 2015 and beyond."

He added: "With the residential sector reflecting the recovering economy, residential sale prices continued to increase across Cairo in the past quarter with the completion of new units in Al Rehab City and Zayed complex adding to the current supply.  With an additional 372,000 sq m anticipated through a number of major new malls, we expect the retail market will experience an increase in vacancy rates and downward pressure on prices."

He continued: "With the government projecting a 20% increase in tourist arrivals this year, we anticipate the hotel sector to undergo further improvement reflected by a significant increase in hotel occupancy rates and the reopening of the Ritz-Carlton and completion of the St. Regis will be welcomed as the first additions to the Cairo hotel market since 2013. Many multinationals have recently relocated offices, which may result in a decline in the level of activity in the commercial sector; however, office supply will also remain below historic levels despite additional supply coming to the market." ​

SECTOR SUMMARY HIGHLIGHTS – CAIRO:

  • Office: Cairo's office market witnessed a slight improvement during the first quarter of 2015 as rental rates increased significantly in New Cairo (mainly in sector one and two), due to relatively higher demand. Rental rates in Central Cairo and West Cairo remained unchanged. The major completion in Q1 2015 was Park Avenue located on the Cairo Alexandria Desert Road. This 15,000 sq m development is now complete, but not yet operational. The Y-o-Y increase in vacancy rate from 21% in Q1 2014 to 33% in Q1 2015 is mainly due to more than 100,000 sq m of additional commercial office space created throughout the year. However, vacancy rates decreased recently by 2% since Q4 2014, signalling stronger demand for commercial space.
  • Residential: Cairo's residential market continues to recover with improved sales figures as a result of recovering economic and political sentiment. Apartment and villa sale prices increased during 2015 across all areas monitored by JLL as many residential developments have few units left and have increased prices accordingly. Performance in the rental sector remains more mixed, with some rents increasing while others are reducing. This is due to the generally unstructured nature of the rentals market in Egypt. There were 250 units in Al Rehab City and 640 units in Zayed complex completed in Q1 2015, and an additional 31 residential developments with 30,000 units are expected to be completed in the rest of 2015. The contribution of Palm Hills Development is notable, with five of their developments planned to be delivered in Q2 alone.
  • Retail: Cairo's retail sector experienced an increase in average retail rents (up 5% in comparison to Q4 2014) and 13% in comparison to Q1 2014. An additional 372,000 sq m of retail GLA are expected to enter the market during 2015, in which 264,000 sq m are due for completion during Q2. The additional supply in Q2 2015 is mainly due to the completion of Waterway Mall in New Cairo City, adding 11,000 sq m of retail space. There are a number of major completions planned for the remainder of 2015, including Madinat Mega Mall (104,000 sq m), Citadel Plaza (120,000 sq m), Capital Mall (40,000 sq m), Mall of Arabia expansion and Mirage Mall ( in New Cairo).
  • Hotels: Cairo's hotel sector witnessed no completions in Q1, although the reopening of the Nile Ritz Carlton (331 keys) and the completion of St. Regis Cairo (292 keys) are expected in later 2015. Occupancy rates have witnessed a significant increase, reaching 53% YT February in comparison to the 35% recorded in the same period of 2015. ADR's slightly increased (2%) to register USD 104 in the YT February 2015. Egypt has seen a 33% increase in foreign tourist arrivals in March 2015 (in comparison to the same month last year), indicating a possible further improvement in market conditions in 2015.

Cairo prime rental clock

This diagram illustrates where JLL estimates each prime market is within its individual rental cycle at the end of the relevant quarter​.


*Hotel clock reflects the movement of RevPAR.

Source: JLL

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