Cairo’s real estate market has performed well in the third quarter of this year with the office segment signalling the most growth, according to a quarterly update by US real estate firm JLL.

The report says the completion of the New Suez Canal has boosted interest in industrial developments along the waterway’s corridor as well as a number of development partnerships expected to undertake the new Capital City scheme.

Office segment improves

Cairo’s office supply reached 911,000 square metres by the third quarter of this year after the completion of the Summit 75 building in New Cairo that added approximately 7,000 square metres to the current office stock.

According to JLL, an improved economic climate coupled with a willingness by tenants to relocate to more organised and efficient office spaces has created an increased demand for office building. The strongest demand has been for space in Sector 2 of New Cairo, where rents have increased by 28 per cent over the past year.

Germany’s Siemens recently relocated its offices to New Cairo, illustrating the trend of multi-national tenants leaving the city centre for suburban areas.

Residential

Growth in the residential segment on the other hand has been slow with only 3,000 units entering the market from 2013 to the third quarter of this year. Despite this, the JLL report says Cairo will see an additional 21,000 units completed by the end of the year.

6^th October City and New Cairo have seen an overall year-on-year increase in both rents and sales for villas and apartments. New Cairo and 6^th October City witnessed a 10 per cent year-on-year increase in apartment rents.

Meanwhile Egypt continues to struggle with affordable housing as pressure on the government increases. The government has been keen on promoting the opportunities in this sector of the market with many calling for improved private public partnership models for middle and low-income housing

Although no new retail projects are expected to be delivered by the end of the year, the third quarter of 2015 witnessed the opening of Mirage Mall in New Cairo and 8,000 square metres of additional retail space within the Cairo Festival City mall development.

The JLL report states that vacancy rates in existing malls remain largely unchanged over the third quarter, although vacancies have dropped to 17 per cent over the past year.

The retail sector has witnessed a lot of interest from GCC investors. The UAE’s Majid al-Futteim (MAF) and Emaar are both undertaking major schemes in Cairo; the Mall of Egypt and Emaar Square.

Egypt’sreal estate market was given a major boost in March last year, with the foreign investors invited to take advantage of Egypt’s growing population. Since the investment conference in Sharm el-Sheikh progress has been slow on a number of major schemes such as the new capital city.

Foreign investors have voiced concerns over the overvalueing of the Egyptian pound and the restrictions on foreign currency exchange. Although Egypt continues to recieve interest for major retail and industrial schemes, the authorities may find that dogmatic foreign currency policies dictated by the central bank continues to subdue investor interest.