Egypt’s real estate and hospitality industries are expected to experience growth, boosted by a revived privatization program and a weaker EGP, accelerating Cairo’s real estate sector’s recovery, according to the latest quarterly report from global real estate consultancy JLL.

The privatization program is aimed at attracting foreign direct investments (FDIs), which is likely to accelerate construction activities and the recovery of the real estate sector in Cairo in the coming years. JLL’s Cairo Real Estate Market Overview Report for Q1 2023 predicts that the expected FDI inflow will relieve pressure on real estate activities across the country, particularly in Cairo.

According to JLL, 4,000 residential units were added during the January-March period, bringing the total stock to 249,000, with an additional 29,000 new units expected by the end of the year. However, project delays and fewer launches may occur due to hikes in construction costs. The average office rent in Cairo decreased by 1% year-on-year in Q4 2022 to $358 per square meter per year.

Hotel occupancy in Cairo rose to 74% in the first two months of 2023, up from 62% in the same period last year, while average daily rates (ADRs) increased by 19% to $135 and revenue per available room (RevPAR) increased by 40% to $100.

With the devaluation of the EGP, improved infrastructure, and the proposed five-year visa, tourist arrivals are expected to jump by 28% to 15 million in 2023 when compared to 2022’s numbers.

During the last quarter, demand and foot traffic in regional and super-regional malls remained low, while strip retail and community centers performed slightly better due to their accessibility and the strong performance of the F&B segment.

The primary malls' average rental rates remained stable year-on-year in Q1 2023, while the secondary retail malls witnessed an average growth rate of 4%. Over the same period, the average vacancy rate slightly decreased to 9% from 11% in Q1 2022.

The government’s privatization/IPO program plans to offer more than 30 state and military-owned companies to strategic investors and/or through offerings on the stock exchange, with the program expected to boost real estate activities in the local market.

“The government’s proactive measures in the form of state support and extension of construction deadlines are aimed to ease the current challenges in the real estate sector, enabling stakeholders to navigate the economic headwinds," explained Ayman Sami, JLL country head for Egypt.

JLL’s report notes that the government’s proactive measures, such as state support and extension of construction deadlines, are aimed at easing the current challenges in the real estate sector and enabling stakeholders to navigate the economic headwinds.