Pulse check on Egypt’s real estate sector: Residential and mixed-use real estate projects from private sector developers worth c. USD 309 bn were under construction across Egypt in 1Q 2023, accounting for around half of all real estate projects and 83% of real estate investments, according to a recent report from real estate intelligence firm Property Finder (pdf). These projects are primarily concentrated in Cairo, followed by Giza, Alexandria, and Matrouh. Along with the increasing supply, there’s been an uptick in real estate buying demand in the market as buyers look to invest in an appreciating asset, the report suggests.

REMEMBER- Real estate players in Egypt have been having a rough time as of late, with plenty of macroeconomic headwinds over the past couple of years, particularly following the start of the war in Ukraine. Infrastructure companies have been squeezed by rising raw and building material prices, higher borrowing costs, and the devaluation of the EGP. In 2022, some 10-20% of real estate developers reported halting their construction projects at some point during the year due to fiscal and logistical pressures, while some indicated they sold off projects before starting construction.

The geographical distribution of projects: Projects under construction by private sector development span 21 of the country’s governorates, with Cairo accounting for 46% of the total number of projects and 59% of the total value. Giza comes in second place, accounting for 16% of projects by volume and 13% by value. Around 12% of projects under construction during the quarter are in Alexandria, but the governorate falls behind Suez and Matrouh in terms of the value of these projects, with Suez taking up 10% of total project value and Matrouh accounting for c.7%.

Most of these projects are well on their way to completion: The completion rates followed a different ranking during the quarter, although Cairo remains in the lead with 61% of projects in the governorate more than halfway complete, including 14% that are over 90% complete. Matrouh comes in second place, with 55% of projects in the governorate more than halfway complete, including 12% that are more than 90% finished. Alexandria follows with 37% of projects hitting or surpassing the 50% completion mark, while 33% of projects in Giza are at least halfway finished. Across the country, c.52% of projects are more than 50% complete.

…and delivery rates are on the rise: Over the course of 1Q 2023, private sector developers delivered a total of 17 projects worth a combined USD 1.3 bn, according to the report. That’s 31% higher than the number of projects delivered in 1Q 2022, while the value of deliveries is up 32% y-o-y, the report says. The majority of delivered projects were in Cairo (24%) and Giza (18%). In Cairo, “Palm Hills Developments emerged as a prominent developer, completing 662 buildings in the Palm Hills-Fera New Cairo project,” in which the developer invested USD 640 mn. Our friends at CIRA also completed their USD 200 mn Katameya Dunes Compound during the quarter, the report notes.

Who’s pouring in fresh investments? The number of newly launched projects dropped 77% y-o-y in 1Q 2023, largely on the back of rising construction costs, the report notes. A total of nine new projects worth a combined USD 1 bn were kicked off across four governorates during the quarter, with the majority again concentrated in Cairo (44%) and Giza (33%). Property Finder estimates that 15 new projects were launched during 2Q 2023. Naia Development — formerly known as Jumeirah Egypt Real Estate Investment — accounted for the highest investment value during the quarter, with the developer investing c.USD 370 mn. Times Development earmarked USD 252 mn for two new projects in New Cairo and El Rehab, while El Attal Holding committed USD 114 mn for new projects. Taj Misr Developments, Raaed Developments, Adva Developments, the Waterway Developments, and Style Home Real Estate Developments also invested in new projects in 1Q 2023.

Prices are also on the up and up: Across the country, the average price of apartments for sale rose 30% y-o-y during the quarter, according to Property Finder’s data. The report attributes the jump to the EGP devaluation and rising construction costs, which have eaten away at developers’ margins. “Additionally, there has been a notable trend of buyers rushing to purchase real estate, in an attempt to hedge against the drop in the value of the local currency against the USD,” the report says. The average one-bedroom apartment was priced at EGP 1.25 mn in 1Q 2023, while two-bedroom apartments averaged at EGP 1.6 mn, and three-bedroom apartments were selling at, on average, EGP 2.55 mn. Villas also saw a 25% y-o-y uptick in asking price, with average prices ranging from EGP 6.4 mn for a three-bedroom villa to EGP 12 mn for a five-bedroom.

Where are people buying? Prospective buyers preferred to purchase apartments in New Cairo, 6th of October, Hay El Maadi, Hay Sharq, and Nasr City, while those looking to buy villas gravitated more towards Madinaty, the new administrative capital, and Hurghada, along with New Cairo and 6th of October.

Your top infrastructure stories for the week:

  • Damietta Port Authority will launch a tender by the end of September for a 10-year contract to exploit a 6.5k square-meter area for handling eco-friendly dry bulk goods.
  • An update on the Sokhna port redevelopment: The first phase of the development of the Ain Sokhna port will wrap before the end of 2023.
Tags: