Commercial real estate represents one of the main pillars of the Egyptian property market with sectors such as office, retail, and hospitality contributing effectively to the overall growth of the market and playing a leading role in driving the entire economy. Invest-Gate tries to offer a glimpse into these sectors’ performance over the year-to-date period, analyzing the recent data and highlighting the most important opportunities and challenges in the market.
Part 1: Office
The office market’s supply recorded a modest increase during the first nine months of the current year, while the sector saw a varied demand across the country’s different areas with most of the rental activities taking place in New Cairo, driven by a significantly high demand in this area.
Developers started releasing new office projects for sale on eased payment terms since the currency devaluation in 2016, reacting towards banks and multinational firms’ rising demand to have space in fully integrated business parks, according to JLL’s Q3 report.
The office stock remained steady at 986,000 square meters of gross leasable area (GLA) by the end of Q1, before jumping by 67,800 square meters by the end of Q2 to 1.05 mn square meters, the same rate witnessed in Q3, according to data collected from JLL reports for Q1, Q2, and Q3.
JLL’s Q3 report shows that flexible offices, a term refers to those offices or co-working spaces offering rents for less than one year, are a growing sub-sector of the market in Cairo, in line with global trends and it targets entrepreneurs, consultants, and owners of small and medium enterprises (SMEs) – who are attracted to lower startup costs, collaborative working spaces, and flexibility of being able to book on a monthly basis.
Mansoor Ahmed, director of Development Solutions, Healthcare, Education, and PPP at Colliers International MENA, comments:
“The need for an office space in dedicated business parks and areas such as New Cairo remain high”
“There is a sharp rise in the number of local businesses willing to relocate to new offices in less congested areas and to developments with better build quality, parking provision, and accessibility, leading to a clear shift in demand with tenants tending to pay more for office space with high quality.”
JLL Country Head in Egypt Ayman Sami explains:
“It is all related in some way, whereby for a flourishing office market to exist, there is a need to expand in foreign investments, create more job opportunities, and intensify the consuming power that, in turn, supports the improvement in the retail market performance, the real estate consultant clarifies.”
“As for the future prospects, the office market will achieve a remarkable growth if the number of the multinational corporations operating in the Egyptian capital increases.”