Despite the challenging times affecting the real estate market in Egyptian capital Cairo, most sectors remained stable during the first quarter with the office sector in particular recorded strong performance, said JLL, a specialist in real estate and investment management.
Cairo’s office sector has seen a 9% increase in average prime rents on an annual basis despite the unfavourable market conditions, due to the limited supply of high-quality offices, stated JLL in its Q1 Cairo Real Estate Market Performance report.
The average vacancy rates have also remained stable at 12% over the last quarter which also reflects an overall strong office performance in Q1.
Various measures that have been taken, including the ‘work from home’ initiative, will see demand for office space likely remain subdued in the short-to-mid term, with requirements focused on smaller fitted out spaces, to minimize capital expenditures, said the report.
On the residential sector scenario, JLL said it remains almost unchanged with limited units delivered in the first quarter, keeping the total residential units at 159,000.
An additional 58,000 units are expected to be completed by the year end, but given the current market condition these are expected to spill over into 2021/2022, stated the expert.
As there is still a large amount of future supply currently under construction in East Cairo, this has placed downward pressure on sale prices over this quarter while the shortage of supply in 6th of October City makes it the better performer in Q1 2020.
The rental market remains landlord-favourable, as rents in both New Cairo and 6th of October City continue to witness an increase, it added.
The retail sector in Cairo has seen positive performance during the first quarter of the year where average rental rates increased by 10% across primary and secondary malls.
However, the current market conditions have suffered from the pandemic and caused an increase in downward pressure on operations and sales volumes, resulting in landlords offering rental exemptions to support tenants. This is expected to reflect even further in the second half of this year provided the temporary lockdown of all retail operations and other preventative measures remain active, according to JLL.
According to JLL, the hotel sector has been the most severely impacted as a result of the pandemic and this is evident especially towards the end of the first quarter with a 30% annual drop in average daily rates (ADRs) while an even sharper decline of 81% took place in occupancy rates.
The hotel supply remained stable at 23,000 keys with no additional completions in the first quarter of 2020 and around 400 keys are still expected to be delivered by the end of the year, it stated.
The real estate expert pointed out that government initiatives were in place to support the hospitality sector during these uncertain times with the support of the Central Bank of Egypt (CBE) allocating E£50 billion ($3.17 billion) for two year loans with a six month grace period to contribute towards salaries and maintenance payments.
The CBE has also recently granted hotels and tourist facilities a financing plan to support hotel development and renovation, added the JLL report.-TradeArabia News Service
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