Our real estate market is finding favor with GCC investors, who are poised to invest over USD 1 bn into our property market, according to Knight Frank’s report on real estate investment in Egypt, Destination Egypt (pdf). The report, which global real estate consultancy Knight Frank conducted in partnership with YouGov, surveyed the investment interest and attitudes of 258 GCC investors whose net worth ranges between USD 100k to USD 1 mn and above.

Egypt is no stranger to Gulf interest: Between 2021 and 2023, Gulf institutions poured over USD 115 bn into Egypt, according to the report. These investments were spearheaded by the UAE in 2021 and 2022, with foreign direct investment coming in from the emirates amounting to USD 5.7 bn. Saudi Arabia took the lead in 2023, recording a total investment of USD 2.1 bn.

GCC institutional investment in Egypt was also reflected in individual interest: Some 94% of GCC-based investors with over USD 1 mn in investable assets are looking to own property in Egypt’s real estate market. Moreover, 54% of the surveyed individuals expressed interest in purchasing real estate in Egypt this year.

Egypt’s real estate market is booming: Valued at an estimated USD 18 bn, Egypt’s property market is projected to grow to USD 30 bn by 2028, the report said.Moreover, real estate investment in Cairo had recorded USD 20 bn in 2022 as average property prices surged 10%, reflecting strong demand, according to Knight Frank’s Africa Horizons 2023/24 report. The high demand came on the back of the weakening of the EGP, which attracted investors who are looking to get higher returns on their purchased property.

Are recent legislative amendments helping push this appetite? Investor interest is being partially spurred by Egypt’s push to build new urban hubs, namely the new administrative capital and New Zayed City, as well as the recent amendments to the Property Ownership Act, which revoke the cap on how many properties foreigners can purchase in Egypt.

The Gulf’s taste for Egypt’s property is only growing stronger: GCC investors are willing to spend on average USD 1.1 mn to purchase property in Egypt as of 2023, per the report. Furthermore, what consolidates their interest is that 96% of GCC investors who own properties in Egypt are looking to buy second homes.

The second home market is where it’s at: The main driver behind Gulf interest in Egypt’s property market is to purchase holiday or second homes, according to Knight Frank, citing 72% of the surveyed GCC nationals.

GCC investors have taken a shine to Egypt’s coasts: The North Coast and the Red Sea fronted the destinations GCC nationals eye for holiday and beach homes. An average of 40% of the GCC investors who are looking to buy a second home in Egypt expressed interest in purchasing property in the North Coast. Additionally, 43% of the respondents who already own homes on the north coast are most likely to buy another home there.

The residential market has been gaining traction: The residential sector attracted USD 16 bn of the USD 20 bn investment poured into the market in 2022, affirming the preference of buyers for residential properties, according to the report. Some 68% of the surveyed GCC nationals showed a preference for buying residential property in Egypt, primarily homes situated in greater Cairo. Following the demand for residential properties, came demand for branded residences at 30% and retail at 29%. Between the 60% of the GCC nationals who revealed that they already own at least one property in Egypt, 36% of them with an average net worth under USD 100k said that they own one home in Egypt, while the 39% owning more than USD 1 mn in investable assets revealed that they own 2-3 homes. As for Emirati investors, the new administrative capital was their first choice for the most appealing location to purchase a residential property.

The caveat: The residential sales momentum might be coming to a halt on the back of faltering emptor confidence due to the weak EGP, the unyielding inflation, and soaring borrowing costs. Adding to the woes of the sector are the halted and delayed construction projects due to inflation resulting in hiked construction costs.

Rampant inflation and EGP depreciation threaten to stunt the sector’s growth: While the sector had a steady growth, there are challenges looming over the market. The biggest challenge is inflation, which reached a record high of 38.0% in September, triggered by the FX crunch and the successive EGP devaluations. Subsequently, “internal risks dominate the minds of 66% of GCC nationals considering an Egyptian residential purchase. At 24%, currency depreciation ranks the highest on the list of perceived internal risks,” Knight Frank said.

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