Following the discussions at the AUC Business Forum 2024 Real Estate Roundtable, we delved into the transformative journey of Egypt’s real estate sector with JLL Egypt Country Head Ayman Sami and AI Capital Chairman Ayman Ismail.

Here are our key takeaways:

The economic backdrop of 2008-2016 echoes that of 2016-2024. According to Ismail, both periods were characterized by foreign currency shortages, fixed exchange rates, high government deficits, weak social protection programs, and economic growth rates below 7%.

Devaluation significantly impacted the real estate sector. The 2016 devaluation triggered a surge in real estate prices as a hedge against inflation. “We witnessed a 24-28% uptick in prices y-o-y by the end of 2017,” Sami explains, “pushing affordability further out of reach and boosting the rental market.” Multiple devaluations in 2021 and 2023 coupled with the FX crunch once again sent prices soaring. “In Sixth of October, prices skyrocketed by nearly 83% y-o-y, while in New Cairo, they increased by 95%, driven by panic purchasing to safeguard savings,” he added.

Ras El Hekma returned stability to the market. According to Sami, the mega-development project on the North Coast provided some measure of reassurance and a clearer economic vision for the future. It also put an end to the panic buying and attracted more foreign investment, particularly on the North Coast. With a booming tourism sector and plans to bring in 30 mn tourists within the next four years, further investment in hospitality and residential units will be required with Ras El Hekma playing a central role.

Real estate continues to be a primary contributor to economic growth. “Construction and real estate make up approximately 20% of the local economy,” said Ismail. “Rising demand is fueled by high marriage rates, rural-urban migration, demand for second homes, and an increasing influx of immigrants, but the market remains highly fragmented and competitive.”

There has been a gradual shift towards the outskirts of Cairo. According to Sami, New Cairo now stands as a key business hub due to its proximity to the airport. Residential real estate has been moving outwards to New Cairo and Sixth of October since the early 2000s, and the next shift is forecasted to be towards fourth-generation cities, such as the New Administrative Capital.

Public vs. private sector spending has evolved. According to Ismail, in the 1990s, public and private sector developers invested equally. By 2008, there was a drastic shift that saw private sector spending on real estate more than double, impacting the availability of subsidized housing. Today, we are witnessing another shift as the government-owned New Urban Communities Authority (NUCA) has become the country’s largest developer.

As Egypt continues to develop mega-projects like Ras El Hekma and attract foreign investment, the future looks promising for the real estate sector. From economic crises to adapting to shifting demographics and market demands, the sector has shown remarkable resilience and growth over the past 15 years.

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