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Egypt’s currency floatation is likely to boost real estate demand from international investors, according to a new analysis.
The recent decision, as well as the interest rate hike of 600 basis points, may have reduced the value of the Egyptian pound (EGP), but it will have a positive impact on the country’s property market, Savills said in its preliminary insights.
Early this month, the country floated its currency against the US dollar, allowing the exchange rate to be determined by market forces. The move was accompanied by an interest rate increase. The recent decisions have initially lowered the value of the EGP against the US dollar by 60%.
“The float will make property in Egypt more attractive to international investors who had been deterred from investing their foreign currency in Egypt while uncertainty over the future direction of the EGP persisted,” said Catesby Langer-Paget, Head of Savills Egypt Office.
“Real estate in Egypt will remain attractive to foreign buyers and Egyptians living abroad for many reasons including lifestyle, tourism and investment.”
Egypt’s growing population is one of the main reasons that Egypt continues to appeal to global investors, according to Savills. The country’s population is expected to reach 157 million in 2050, according to the National Population Council.
The trend is in stark contrast with other markets like Japan and Italy, where the populations are dwindling, Savills noted.
The real estate consultancy said property prices in Egypt will also remain stable.
“Developers had already factored in the parallel market USD price when setting costs, which had reached highs of EGP70 before the floatation,” Savills noted.
(Writing by Cleofe Maceda; editing by Seban Scaria)
