Cairo’s residential rental market witnessed positive performance in the first quarter of 2021, with some projects exceeding market performance, according to JLL’s Q1 2021 Real Estate Market Overview report released today.
“This is mainly due to the increase in demand for newer gated communities which are now becoming more mature and livable,” commented Ayman Sami, Country Head, JLL Egypt. “The overall rental market increased marginally by 2% and 1% annually in 6th of October and New Cairo, respectively.”
In Q1 2021, Cairo’s residential market saw the completion of around 4,000 units, bringing the total residential stock to around 212,000 units. An additional 21,000 units are expected to be delivered by the end of the year. Going forward, JLL expects the sector to witness a boost in demand following the recent announcement by the Central Bank of Egypt (CBE) that it has launched a new mortgage finance programme with a 3% interest rate. The new mortgage financing programme is directed at low and middle-income Egyptians to support their ability to own housing units through long-term loans of up to 30 years with low interest that does not exceed 3%.
“Once activated, this initiative would not only significantly increase demand in these income segments, but it would also instigate private developers’ participation in the development of low-to-middle income housing units in the future,” added Sami.
The office market witnessed a slight uptick in leasing enquiries for serviced offices and smaller fitted-out units by small-to-medium enterprises (SMEs) and new market entrants. Bigger multinational and blue-chip companies, however, continue to face uncertainties in terms of area requirements due to the remote and flexible working scheme implemented since the start of COVID-19. From a performance perspective, asking rents in Cairo remained stable annually at USD 325 per sq m while vacancy rates dropped to 9% in Q1 2021.
Cairo’s retail market saw strip retail with an open-air setup continue to attract most demand and footfall. Therefore, landlords in secondary malls were able to increase their asking rents by almost 5% in the first quarter of 2021, whereas rental rates in primary malls remained flat on an annual basis due to lower activity in super-regional and regional malls. Similarly, average vacancy rates remained stable at 11% in Q1 2021. As part of efforts to support the growth of e-commerce in Egypt and facilitate the movement of retailers into omnichannel retail, some landlords are increasingly utilizing the vacant and extra spaces in malls to serve as fulfillment centers for online purchases.
Cairo’s hotel market maintained the total stock of hotel keys at around 27,000 in the first quarter of 2021. Almost 900 hotel keys are expected to be delivered by the end of the year. The report highlights that the sector has great growth potential given the strong supply pipeline and the diversified existing product and service offerings. “Some hotel operators are recognizing these opportunities and have expressed their interest in enhancing and expanding on their asset portfolio in the city. This is expected to boost market confidence and accelerate the recovery of the hotel market in the long term,” said Sami.
Source: Four Communications