In spite of its long-term potential, the Egyptian real estate outlook for commercial, retail and industrial, continues to be susceptible to instability, which will be characterized by the aftershocks of the Arab Spring in the short-to-medium term.
With a focus on the principal areas of Cairo, New Cairo, 6th of October City and Giza, reports show that the rental market performance in terms of rates and yields over the past 18 months has continued to grow.
The key risks and opportunities are driven by both domestic and regional investor activism, combined with the future potential of the domestic consumer market, while I see little prospect for a swift economic recovery in Egypt in 2012.
Although I remain bullish in the long-term, data has started to reveal the tangible effects of Egypt’s uneasy political transition on the commercial real estate market, with retail space suffering particularly from the country’s volatility. I expect rents to stabilize over the coming quarters, but beyond the trend of increasing rental divergence, the return to pre-Arab Spring rental rates will be a gradual process.
Key Points: High quality space across the three sub-sectors is forecast to outperform due to a shortage of new supply.
I would expect growth to remain anemic through end-FY2012/13, with investment not picking up until after 2013. With the political backdrop likely to remain volatile over the coming quarters, growth momentum will fail to gather much steam.
So while before the Arab-Spring I would have said invest in Egypt, at this point it’s a time to wait and see.
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