10 October, 2018

Cairo’s tourism revival paves the way for ongoing economic growth, says JLL

Strong performance across most sectors of the real estate market in Q3 maintains investor confidence

Cairo, Egypt – October 10, 2018: Cairo’s real estate market continues to witness a positive performance across most sectors. JLL’s latest Q3 report outlines strong results in the tourism sector as the government continues to drive economic growth through promoting and diversifying the country’s hospitality offering.

According to Oxford Economics, GDP is set to increase by 5.3% in the 2017/2018 fiscal year compared to 4.2% in the previous year owing to increased investment, economic reform and a revived tourism sector. Increased investor confidence is also evident from the positive sentiment across the residential, office and retail sectors.

JLL’s report released that Cairo’s tourism generated $4.8 billion during the first half of 2018, a steep increase from the same period in 2017. Strong demand in the sector is reflected by increasing occupancy rates, at 70.1% compared to 63.9% in the same period of 2017, and this upward curve is expected to continue in the long term with average daily rates also up compared to last year.

“Tourism remains a pillar of the Egyptian economy and one of the main generators of foreign currency – a valued inflow considering the recent devaluation and pressure on the Egyptian pound. The government has invested significant resources into diversifying and promoting the country’s tourism offering which has been a driver of the hospitality sector’s recovery this year,” said Ayman Sami, Country Head, Egypt, JLL.

Inbound tourism has been boosted by improved security measures and resumption of flights that were previously banned. This quarter also witnessed enhanced visitor experiences with improvements around major attractions like the Pyramids in Giza. Growing hospitality areas such as Maadi and New Cairo are increasing room supply and although there were no major hotel additions over Q3, a further 623 rooms are expected to enter the market by the end of 2018 with the completion of the Hilton Maadi and St. Regis in Downtown Cairo.

“The strong performance across the real estate market and ongoing positive sentiment continue to provide a long term attractive investment environment, further supporting the government’s focus on economic development,” Sami continued.

With a positive outlook over the next year, the office sector continues to grow with demand equally distributed between leasing and sales in good quality integrated office parks. The sale of office space represents a relatively new phenomenon, with developers responding with new office projects for sale on eased payment terms.

In addition, global trends are emerging in Cairo, such as the adoption of flexible work spaces which is a growing sub sector of the city’s office market. Many of these projects are targeting new startups or entrepreneurship ventures.

As for the residential sector, it continues to perform strongly despite a demand shift towards coastal areas over the summer season, leaving the Cairo market with slower activity. Secondary sales experienced a slight drop in prices over the quarter due to increased primary sales. The New Cairo market experienced an increase in quoted rents in Q3, following the adjustment of contracts.

The retail sector remains relatively unchanged with rents remaining stable and vacancies remaining level over the quarter. Vacancies are however expected to increase in the medium term, due to new market additions. Local brands continue to perform strongly due to changes in demand preferences and affordability levels, resulting in higher competition with international brands.

The full report can be downloaded here.