Industrial rents in Egypt are forecast to fall sharply in 2023 due to economic challenges and the depreciation of the Egyptian pound against the US dollar, Fitch Solutions said in a new report.

Average rents are down by more than 30 percent year-on-year in Cairo, Giza and Alexandria in US dollar terms, the London-based research firm added.

In Egyptian pound terms, however, rents will continue to grow moderately after faster growth in 2022. Over the medium term, stable growth in imports and exports will boost demand for industrial space.

For example, In November 2022, Turkey-based global household appliances giant Arçlik unveiled plans to build a new $100 million manufacturing facility in Egypt with 60 percent of its output for exports. 

The report also noted that rental rates are expected to fall less in Alexandria compared to Cairo and Giza due to its industrial trade links with the Suez canal and the oil and gas pipelines that run through the city.

Industrial property will benefit from China’s stated interest in providing Egypt with a trade stimulus package, which will open the door for the development of new industrial and manufacturing facilities. A large pipeline of infrastructure projects should also support continued growth in demand for industrial space.

Also, the market is set to benefit from the growth of online retail, which is boosting demand for modern warehouse space both from e-commerce players and third-party logistics firms, Fitch Solution noted. 

Last month, Hassan Allam Utilities, the investment and development arm of Egypt’s Hassan Allam Holding, and Agility, the Kuwait-based industrial development company, announced a joint venture, YANMU, to develop, build and operate modern logistics parks and Grade A warehousing facilities in Egypt.

(Writing by P Deol; Editing by Anoop Menon)