In the early 1990s my neighbor told me that he and his family were moving to the 6th of October City. At the time it sounded like a risky move. Roads were not well connected to this area. Electricity, water and gas abundance, as well as, Security were all serious challenges. A few years later, huge projects were being constructed in the city, Currently the City stands out in network and quality of services provided.
In 1996, The American University in Cairo announced that the university bought a large piece of land in New Cairo (The Fifth Settlement). People were encouraged by the move and a wave of new projects launched within the following few years. Prices were attractive and the idea of installments to finance your home added to the success of those projects. Investment in this sector was booming at an incredible pace, to the extent that people would just pay a few thousands to book a unit in a project, a few months later they sold the booking receipt two or three times its value. Currently the city has grown thriving with residents and a highly developed network connecting it to greater Cairo zones, as well as, the new Administrative Capital.
Today the market is evolving with counter speculations regarding the future of investing in Real Estate due to the complexity of the scene.
On one hand skepticism regarding the increased number of Units available versus the increased prices of these units at a time the economy is facing multiple challenges that directly impact sales.
It is true that the number of residential, commercial and administrative projects has grown tremendously since the 1990s to-date, with high demand that was reflected within the new cities developed like Al Rehab, Madinaty, El Sherouk, Sheikh Zayed, New Sphinx and New Zayed. Yet, Driving your car through those cities, you will come across thousands of empty units, pushing the sector towards a stage of saturation. The availability of units by far exceeds current demand widely impacted by the current economic situation. The equation within this perspective is balanced by the fact that prices have escalated significantly due to the actual increased costs of construction and inflation, along with the fact that competition between cities and companies themselves in offers and facilities have led developers into stretching payment plans for 7-10 year installments, which reflected an economic stability within the sector.
Yet, Today if you want to sell a residential unit you bought a few years back to make a sizable capital gain like before, it is very challenging, especially with the availability of new off plan projects with only a 10 percent down payment and installments over 8 years.
On another hand, Egypt is the largest Arab country with young population and expansion of the city’s infrastructure and Mega real estate projects remain a guaranteed investment especially that the history of the sector over the past decade marks it as the mostly stable investment regardless of challenges faced by the country over the past decade, starting from the 2011 revolution, the state of insecurity & instability that followed, through Covid and up to date with the continuous devaluation wave that hit Egypt over the past year. Such stability in the real estate market is a solid proof the investment is lucrative in comparison to other sectors.
The Real Estate boom in Egypt started in the early 1990s and resumed its growth after 2013 with the new Mega projects launched by the government, however, with the devaluation of the Egyptian pound, the Sector is still regarded as an opportunity for small and medium size investors to overcome the devaluation by investing in real estate to sustain their money value.
Recently, over 100 foreigners applied for Egyptian residency in return for buying property as announced by the Ministry of housing last week, a trend that should be regarded proactively, especially that no real marketing has been invested into developing these new clients to the sector. While an increased number of Syrians, Sudanese and others form an important segment and target audience for developing sales within the sector.
On the other hand, there are millions of Egyptians working abroad, some of whom have in the past years invested in property especially in projects like Al-Mostakbal City, and others either awaiting the proper opportunity or have not been able to due to their budgets (according to rates prior to devaluation). Such a wide target audience has the golden opportunity due to the devaluation of the Egyptian pound, specially with Market prices currently within budget if translated into foreign currency for a wider market segment, which is a marketing venue that needs to be tackled by the State, as well as, Real Estate Companies.
The sector’s success lies in being able to actively promote properties at Events & customised Fairs for the sector within selected countries. A coordinated effort between related Government & Private bodies for maximizing returns out of this opportunity is essential at this stage, especially that returns for both the buyer in current value and future returns, as well as, the seller and government in foreign currency cash flows, is an ideal win-win solution.
