PHOTO
Cairo - JLL, the world's leading real estate investment and advisory firm, today has released its first quarter (Q1 2015) Cairo Real Estate Market Overview report that assesses the latest trends in the office, residential, retail and hotel sectors.
Ayman Sami, Head of Egypt Office at JLL MENA, commented: "All sectors of the Cairo real estate market have witnessed positive performance and improved sentiment. Significant efforts by the government to expand the economy and attract investors, including the recent Egyptian Economic Development Conference, have resulted in confidence and new investment commitments of more than USD 12.5 billion from four GCC countries. This confidence is most clearly demonstrated by the recentlyannounced mega real estate project of the new Cairo Capital,which marks a natural long term progression to the East of Cairo.Given Cairo Capital will create a bigger magnet for business towards the East of Cairo, we expect that the West will need to reposition itself differently, and this will most likely be as a tourist and entertainment area. These trends provide great optimism as all real estate sectors should continue to benefit in 2015 and beyond."
He added: "With theresidential sector reflecting the recovering economy, residential sale prices continued to increase across Cairo in the past quarter with the completion of new units in Al Rehab City and Zayed complex adding to the current supply. With an additional 372,000sq m anticipated through a number of major new malls, we expect the retail market will experience an increase in vacancy rates and downward pressure on prices."
He continued:"With the government projecting a 20% increase in tourist arrivals this year, we anticipate the hotel sector to undergo furtherimprovementreflected by a significant increase in hotel occupancy rates and the reopening of the Ritz-Carlton and completion of the St. Regis will be welcomed as the first additions to the Cairo hotel market since 2013. Many multinationals have recently relocated offices, which may result in a decline in the level of activity in the commercial sector; however, office supply will also remain below historic levels despite additional supply coming to the market."
SECTOR SUMMARY HIGHLIGHTS - CAIRO:
• Office:Cairo's office market witnessed a slight improvement during the first quarter of 2015 as rental rates increased significantly in New Cairo (mainly in sector one and two), due to relatively higher demand. Rental rates in Central Cairo and West Cairo remained unchanged. The major completion in Q1 2015 was Park Avenue located on the Cairo Alexandria Desert Road. This 15,000 sqm development is nowcomplete, but not yet operational. The Y-o-Y increase in vacancy rate from 21% in Q1 2014 to 33% in Q1 2015 is mainly due to more than 100,000 sqm of additional commercial office space created throughout the year.However, vacancy rates decreased recently by 2% since Q4 2014, signalling stronger demand for commercial space.
• Residential:Cairo's residential market continues to recover with improved sales figures as a result of recovering economic and political sentiment. Apartment and villa sale prices increased during 2015 across all areas monitored by JLL as many residential developments have few units left and have increased prices accordingly. Performance in the rental sector remains more mixed, with some rentsincreasing while others arereducing. This isdue to the generally unstructured nature of the rentals market in Egypt. There were 250 units in Al Rehab City and 640 units in Zayed complex completed in Q1 2015, and an additional 31 residential developments with 30,000 units are expected to be completed in the rest of 2015. The contribution of Palm Hills Development is notable, with five of their developments planned to be delivered in Q2 alone.
• Retail:Cairo's retail sectorexperiencedan increase in average retail rents (up 5% in comparison to Q4 2014) and 13% in comparison to Q1 2014. An additional 372,000 sqm of retail GLA are expected to enter the market during 2015, in which 264,000 sqm are due for completion during Q2. The additional supply in Q2 2015 is mainly due tothe completion of Waterway Mall in New Cairo City, adding 11,000 sqm of retail space. There are a number of major completions planned for the remainder of 2015, including Madinat Mega Mall (104,000 sqm), Citadel Plaza (120,000 sq m), Capital Mall (40,000 sqm), Mall of Arabia expansion and Mirage Mall ( in New Cairo).
• Hotels: Cairo's hotel sector witnessed no completions in Q1, althoughthe reopening of the Nile Ritz Carlton (331 keys) and the completion of St. Regis Cairo (292 keys) are expected in later 2015. Occupancy rates have witnessed a significant increase, reaching 53% YT February in comparison to the 35% recorded in the same period of 2015. ADR's slightly increased (2%) to register USD 104 in the YT February 2015. Egypt has seen a 33% increase in foreign tourist arrivals in March 2015 (in comparison to the same month last year), indicating a possible further improvement in market conditions in 2015.
Cairo prime rental clock
This diagram illustrates where JLL estimates each prime market is within its individual rental cycle at the end of the relevant quarter.
*Hotel clock reflects the movement of RevPAR.
Source: JLL
-Ends-
About JLL
JLL (NYSE: JLL) is a professional services and investment management firm offering specialized real estate services to clients seeking increased value by owning, occupying and investing in real estate. With annual fee revenue of $4.7 billion and gross revenue of $5.4 billion, JLL has more than 230 corporate offices, operates in 80 countries and has a global workforce of approximately 58,000. On behalf of its clients, the firm provides management and real estate outsourcing services for a property portfolio of 3.4 billion square feet, or 316 million square meters, and completed $118 billion in sales, acquisitions and finance transactions in 2014. Its investment management business, LaSalle Investment Management, has $53.6 billion of real estate assets under management. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated.
For further information, visit www.jll.com.
About JLL MENA
Across the Middle East, North and Sub-Saharan Africa, JLL is a leading player in the real estate market and hospitality services market. The firm has worked in 40 Middle Eastern and African countries and has advised clients on more than US$ 1 trillion worth of real estate, hospitality and infrastructure developments. JLL employs over 200 internationally qualified professionals embracing 30 different nationalities across its offices in Dubai, Abu Dhabi, Riyadh, Jeddah and Cairo. Combined with the neighbouring offices in Casablanca, Istanbul and Johannesburg, the firm employs more than 550 professionals and provides comprehensive services in the wider Middle East and African (MEA) region.
For information, please visit our website: www.jll-mena.com
Office 86, 8th Floor│ Star Capital 2│Cairo, Egypt │Tel: +202 2480 1946Fax: +202 2480 1950 www.jll-mena.com
Contact:
Ayman Sami /Kathryn Athreya
Phone: +202 2480 1946/+971 4 426 6999
Email: ayman.sami@eu.jll.com / kathryn.athreya@eu.jll.com
Ref: JLL_Cairo Q1 2015
Erica Pettit / Vadia Rai
+971 4 4372105 /+971 4 4372110
erica.pettit@fticonsulting.com /vadia.rai@fticonsulting.com
© Press Release 2015
