Strength of Egypt’s commercial real estate sector is encouraging investment

Egypt Real Estate
(Construction machines are seen at the site of the futuristic, iconic tower skyscraper, in the business district, which is being built in the New Administrative Capital (NAC) east of Cairo, the New Administrative Capital (NAC) east of Cairo, Egypt)

Egypt’s commercial real estate stock maintains its position as a cost-effective investment, Fitch Solutions said in its report on the Arab country’s real estate for the second quarter of 2022.

The agency added that government efforts to increase foreign investment and boost private sector activity in the economy should prove positive for the commercial real estate market. Cairo continues to be the main focus of commercial real estate investment activity, according to the report.

Fitch also said that the strength and overall situation of Egypt’s commercial real estate sector is encouraging investment in the market due to the ongoing development and construction of 20 new cities, in addition to the development of the 23 existing new cities. Egypt is witnessing a huge development through building new cities in various areas of the country. According to the official website for the Ministry of Housing, fourth-generation cities are planned urban developments that integrate advanced infrastructure and ICT technologies.

The new cities, among them New Administrative Capital, New Alamein City, East Port Said (Salam), New Mansoura, New Ismailia, El Galala, New Sheikh Zayed, October Oasis, West Beni Suef, New Mallawi, Nasser (West Assiut), West Qena and New Toshka, provide potential investors with attractive, large-scale real estate project opportunities. Demand is predominantly for income-producing office and retail assets, though there is increasing interest in industrial facilities on the back of positive market conditions.

Furthermore, the report warned that the Egyptian real estate sector faces challenges from
elevated commodity prices, the weakening of the EGP, and rising domestic interest rates which will take their toll on households’ purchasing power and cause social unrest.

“We believe that the authorities’ business-friendly reforms to improve the business environment and increase the private sector’s participation in the economy, along with the materialisation of more than $25bn in investment pledges by the UAE, Saudi Arabi, and Qatar will partly offset slowing public investment. However, more is needed to attract additional foreign investment, reduce the footprint of the state in the economy, and improve the business environment,” Fitch said.