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Skyrocketing Property Prices in Cairo; Upscale Areas See Up to 180% Increase
Posted on September 12, 2024 |
The Cairo property market has been marked by a dramatic increase in prices across its upmarket neighbourhood areas. In the run-up to the second quarter of 2024, sale prices in the 6th of October City and New Cairo saw dramatic year-on-year rises of 175 and 180%, respectively.
It is not only the sales that have increased; even the rental prices have shot up considerably. New Cairo saw a surge of 122% in its rental rates, while 6th of October City recorded an increase of 101%. This unparalleled growth reveals the new scenario of the Cairo real estate market - undesirable from an affordability standpoint, thus making it a long-term concern.
Drivers Behind the Surge in Cairo’s Property Prices
Several brokers have confirmed that rent prices in the mainstream districts also surged by at least 50%. With growing concerns over a property bubble, wherein properties become overpriced, Prime Minister Mostafa Madbouly ruled out the possibility of any decline in prices on grounds of sound economic reasons behind the current hike.
A contributory factor to this rise in price is of course devaluation. Egypt signed off its fourth devaluation in two years in March in 2024, when the pound lost almost 2/3rds of its value; the direct outcome was a 20% hike in benchmark construction rates.
Although it has been five successive months of decline, the inflation has decelerated in July; the double-digit rate is still high. It has been seen that many Egyptians have turned to real estate for safety and a hedge against instability in the currency.
To make purchasing more feasible in the face of such increasing prices, developers have also offered extended payment plans of up to 10 years to keep the acquisition attractive. Furthermore, business consultant Muhammad Khattab of the real estate industry claims speculators hoping to make a profit on the excitement of the market create fake demand that only adds to increases in prices.
Expanding Demand from Locals and Expats
Egyptian expatriates, levering the favourable currency rate, have also gone on a property-buying spree, fueling the already high demand of the market. Other government reports also indicate that the Egypt real estate sector has been at a high, with nearly 9 million foreign high and middle-class residents. Hundreds of thousands of Sudanese refugees have sought refuge from the war that engulfed their country in April 2023, further raising the Egypt housing demand.
Although developers and the government have been promoting Egyptian properties abroad, particularly in the Gulf countries, no concrete data is available concerning the number of foreign acquisitions.
Real Estate Market Growth and Future Developments
Recent studies are optimistic about the residential real estate market in Egypt. During Q2 2024, Cairo added 2,200 residential units to reach a stock of approximately 278,000 units. The market is still expected to grow further by the addition of about 22,000 units during the second half of 2024.
The construction segment remains strong, particularly in areas like the New Administrative Capital, 6th of October City, and New Cairo. In fact, as an outlook by Mordor Intelligence forecasted, the Egypt real estate market stood at $20.02 billion in 2024, being set for a rise of $33.67 billion by 2029. Still, ongoing market uncertainties keep developers cautious, selective with new project launches, and cost-conscious. It also reflects research showing that, though the market indeed stabilised in the second quarter, project launches for the future might be delayed.
Egypt’s Emerging Year-Round Destination
Today, the North Coast is rapidly becoming one of Egypt's significant real estate participants. Projects like Ras El-Hekma development and New Alamein City make it a year-round destination where one can reside rather than merely visit during the season. Interest by participants such as the Talaat Moustafa Group and the government in their development indicates how the Egyptian real estate strategy has turned toward the North Coast, hence making it the hot spot for future growth.
Conclusion
While there has been a steep rise in property prices across Cairo's posh areas, Egyptians and foreign investors still perceive value for money in the real estate sector, especially at North Coast developments. Strategic government initiatives, an increasing expatriate population, and ongoing construction projects have guaranteed that interest in these prime properties would never dwindle. While Egypt's real estate market is increasingly becoming sophisticated, it remains one of the most vibrant investment opportunities in pursuit of long-term growth, though at more expensive prices.
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