Egyptian Developers Defy Economic Conditions with EGP 71 Bn in Q1 Sales

Egyptian Developers Defy Economic Conditions with EGP 71 Bn in Q1 Sales

By Muhammad Khalid

The Egyptian real estate market has faced numerous economic challenges in 2022 that have negatively impacted sales. High inflation, currency depreciation, and interest rate hikes have reduced the purchasing power of both local and foreign buyers.

There are some positive indicators for sales in Egypt’s real estate sector, as major developers achieved over EGP 71 bn in sales during Q1 2023. The government’s plans to privatize state assets could also boost foreign investment and demand.

However, rising construction costs and the broader economic slowdown remain a challenge. With the right policies to encourage buyers and investment, sales in Egypt’s real estate market show signs of resilience and potential growth going forward.

Surging Sales Despite Higher Costs

From the beginning of 2023 until the end of March, prices of steel rebars surged by 50%, while prices of cement and ready-mix concrete increased by 12% and 7% in the same period, according to a report by the Board Consulting Real Estate Dynamics Newsletter.

The New Administrative Capital (NAC), which was previously the primary focus, is now slowing down, leaving room for other areas in Greater Cairo to emerge, the newsletter notes. “Many developers are now looking into other governorates to penetrate, like Madinet Masr that have done a rebranding to cater for different needs in governorates starting with Assiut.”

The board consulting monitored sales of 10 major developers in its newsletter, which showed that they achieved EGP 71 bn in contractual sales during Q1 2023.

Government Initiatives Aim to Spur Sales

The Egyptian government is implementing measures that have the potential to increase sales in the real estate market. These initiatives could provide a much-needed boost to real estate sales that have been hampered by recent economic challenges.

Earlier this month, Prime Minister Mostafa Madbouly announced that the government will lift restrictions that currently limit foreigners to owning only two properties, both of which currently must be located in different cities.

He also stated that the state will work to expedite land registration for investors, in response to complaints about difficulties processing applications with the Supreme Council for Investments.

On March 29, the Egyptian cabinet approved proposals from the Ministry of Housing to provide various financial incentives and facilities to investors and real estate development companies amid current challenges.

The incentives include extending the construction period for all service, investment, and urban development projects by 20% beyond the original deadline. This extension applies to projects that are still under development.

Future Outlook

According to a report by JLL, Egypt’s plans to offer 32 state owned companies are expected to boost real estate activities in Cairo in the coming years.

“The anticipated FDI inflow is fueling optimism and is expected to relieve pressure on real estate activities across the country, particularly in Cairo,” said Ayman Sami, JLL Country Head, Egypt.

Around 4,000 residential units were delivered in Cairo during Q1 2023, bringing the total existing stock to about 249,000 units. Over 29,000 units are expected to be completed by the end of the year, the JLL report revealed.

Total residential units constructed in Egypt during FY 2021/2022 reached 246,100 with a cost of EGP 143.5 bn ($4.64 bn), a 36.65% decline over the previous year, according to the Central Agency for Public Mobilization and Statistics (CAPMAS) Bulletin of Housing. In FY2020/21, 336,300 residential units were built for EGP 150 bn ($4.85 bn).

Macroeconomic Headwinds

The Egyptian real estate market was hit by shockwaves in 2022 on the heels of the eruption of the Russia-Ukraine war, including soaring inflation, multiple currency devaluations, and rising interest rates.

Since March 2022, the value of the Egyptian pound has plummeted by almost 100%, currently trading at around EGP 31 to the US dollar.

The steep currency devaluation has resulted in a surge in inflation, with the annual core inflation rate peaking at 40.3% in February before slightly declining to 39.5% in March.

Meanwhile, the annual headline inflation rate skyrocketed to 33.9% in March 2023, up from 12.1% in March 2022. To combat inflation, the Central Bank of Egypt (CBE) hiked interest rates by 8% in 2022 and then increased them by another 2% in March 2023.

Raising interest rates increased the cost of borrowing which put a limit on a source of funding for developers and property buyers alike.

Despite recent headwinds, there are some positive signs for Egypt’s real estate sector. Government reforms and investment plans could boost construction activity and demand, while new developments outside of the NAC are gaining momentum.

However, rising material costs and the economic slowdown present continued risks. With the right policies and investments, Egypt’s real estate market stands to weather the current challenges and emerge stronger in the coming years.


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