Cairo property shows signs of life

Arab Spring economies: Cairo's property market is starting to experience signs of recovery after months of paralysis following the revolution.

Up and running: life has returned to the Cairo property market over the past three months as developers resume work on stalled projects. Dana Smillie for The National

Cairo's property market is starting to experience signs of recovery after months of paralysis following the revolution.

According to the property agency Jones Lang LaSalle, life has begun to return to the Cairo market over the past three months as developers return to work on stalled projects.

The slight revival follows 18 months of political turmoil in which violence and street clashes forced companies to relocate office activities out of central Cairo, pushed foreigners out of the country and halted construction work.

According to the agency, occupancy rates in the Egyptian capital's hotels have started to recover and stood at 53 per cent in August, up from the 44 per cent recorded in August last year.

Shopping centre development was also showing signs of recovery. Jones Lang LaSalle predicts that the amount of shopping space in the city will increase by 41 per cent by the end of next year as developers build 408,000 square metres of new mall space, including Majid Al Futtaim's Cairo Festival City.

There was also some good news for Cairo's beleaguered housing with Jones Lang LaSalle forecasting that after months of inactivity, developers would complete 4,000 new homes by the end of the year and another 28,000 next year.

During the third quarter, the developers Mountain View and Sixth of October Development and Investment Company have launched new phases to their Hyde Park and Westown housing projects.

Vacancy rates for the city's best office space fell from 38 per cent in June to 31 per cent in September according to Jones Lang LaSalle as oil and banking firms in the city started to expand again. The agent said it knew of a further 64,000 sq metres of potential demand for new office space in Cairo.

But according to the research, economic and political instability have taken their toll on the market, with property prices across all sectors continuing to languish.

Jones Lang LaSalle said that rents in Cairo's biggest shopping centres were down by 20 per cent to 30 per cent over the past year, standing at US$920 (Dh3,379) to $1,410 per sq metre annually.

Daily rates for hotel rooms have fallen from an average of $53 a night last year to $49.

Office rents have also suffered a continued decline. In the central business district, prime asking rents fell 5 per cent during the third quarter to $40 per sq metre per month.

And with headline inflation at 6.2 per cent in the year through last month, house prices showed a real-term decline.

In New Cairo, Jones Lang LaSalle said average villa annual prices fell slightly from $1,780 per sq metre in the first quarter of the year to $1,609 per sq metre. Apartment prices in the area rose slightly from $1,040 to $1,198.

"With a return to a more political stable environment under a business-friendly government, we are a seeing increased investor and consumer confidence," said Ayman Sami, the head of Jones Lang LaSalle's Egypt office.

"Consequently, the Cairo and broader Egyptian real estate market is poised for recovery across all sectors. The office and retail sectors will benefit from growth in the economy, residential sales have started to pick up as people begin to believe in the recovery and the hotel sector will benefit from the authorities' hard work to encourage visitors back to the country.

"While the improved sentiment and confidence has yet to be reflected in price or rental increases... we would expect to see more investment and development announcements and stronger performance over the next few months."