A new jump, a jump in the total rental prices of apartments

The hotel sector in Cairo witnessed further recovery during the second quarter of the year, as occupancy rates rose to 60% during the first five months of 2022, almost double the rate compared to 32% recorded by the market during the same period last year. While the total market supply of hotel rooms remained flat due to no new projects being completed during that quarter, approximately 600 rooms are expected to be delivered by the end of the year.

Despite the limited supply expected of hotel rooms during the remainder of the year, the sector is attracting great interest from international hotel operators, which may lead to the announcement of new projects throughout the capital. Moreover, the completion of the construction of the Grand Egyptian Museum, which is expected to be completed in September of this year, along with the concerted government efforts to promote the tourism sector through its reforms of visa systems and marketing campaigns, is likely to pave the way for a massive influx of tourists and investors. over the coming years.

Ayman Sami, Country Director of JLL Egypt, said: “The Egyptian government's ongoing efforts to boost inbound tourism, contain inflation, and increase its focus on high-value markets in Europe and the United States are reflected in the strong growth levels of the hotel sector. We expect all sectors to benefit. The real estate market is one of the positive impressions that these initiatives establish, which results in the improvement of domestic demand in addition to attracting a large influx of foreign investments in the coming years.”

1.8 million square meters, the total administrative space in Egypt

In contrast to the first quarter of the year, the office space sector witnessed the delivery of more than 80,000 square meters during the second quarter of the year, bringing the total supply of office space in Cairo to about 1.8 million square meters. In addition, approximately 170,000 square meters of total office space is scheduled to be completed during the second half of this year.

Despite the noticeable increase in inquiries about office space in the capital, the market witnessed only a limited number of deals due to the uncertainty caused by the recent depreciation of the Egyptian pound and the prevailing inflationary pressures. This has prompted landlords to increase rents to help manage cash flow and liquidity issues while maintaining commercial activities, which in turn has prompted occupants to look for smaller equipped units in order to reduce operational costs incurred. The demand for flexible workspaces and co-working spaces continued to grow, due to the increase in the number of start-ups, self-employment, and the adoption of some companies’ “work from anywhere” policies, which prompted a number of large flexible space operators to announce their expansion plans in the capital.

$340 per year administrative meter rent

The average required rents increased by 3% annually to reach about 340 US dollars per square meter annually in Cairo. At the same time, the vacancy rate for offices in the capital increased slightly to 10% (from 9% recorded during the second quarter of 2021) and did not witness any change from the previous three months.

As for the housing sector, the capital's increase in rents and overall prices was driven mainly by the apartment segment. The second quarter witnessed the completion of nearly 4,000 housing units, bringing the total supply in the city to 234,000 units; Regarding the expected supply, about 16,000 units are expected to be delivered during the second half of 2022.

The activity in the housing sector declined during the second quarter of the year, which in turn affected the developers. While some resorted to raising the bid price to help overcome the high cost of building materials and machinery, generate the cash flows needed to manage expenses associated with ongoing projects, and enable themselves to continue offering attractive incentives to new buyers, others chose to postpone the launch of new projects until the economic situation stabilized. current.

In order to compensate for the deterioration in purchasing power, the owners of residential real estate in the secondary market also increased the bid prices and rents, which were reflected in the percentage jump in the market compared to last year by 8% in the Sixth of October region and by 12% in the New Cairo area during the second quarter of general. Meanwhile, rents in the secondary market rose at a much slower pace of 3% and 1% in the 6th of October and New Cairo areas, respectively.

The stability of the supply of retail outlets projects

 In the retail sector, no new projects were launched during the second quarter, and as a result, total market supply in Cairo remained flat at around 2.9 million square metres. Although 220,000 square meters of retail outlets are expected to be completed during the second half of 2022, it is likely that there will be delays in their operation under the current scenario, affecting the projects to be completed.

Against the backdrop of the prevailing economic climate, the majority of international owners operating major shopping malls in Egypt have granted retailers facilities by using flexibility in negotiations to maintain occupancy rates and footfall as well as implementing other strategies such as revenue sharing, attracting popular brands, and expanding food and beverage offerings. To boost their profits increase.

In addition, Egypt has also seen a jump in the cost of goods across all categories, which has led to an increase in consumers' focus on purchasing their basic necessities. Concepts such as valU have gained increased attention not only by reducing the burden on consumers of paying for goods in advance, but also by assisting major outlet partners.