The Egyptian real estate market saw significant development and substantial growth throughout the past few years, thanks to the major expansion of new cities and the high demand from local and foreign homebuyers. Today, the country’s property market is believed to seize the regional market with a number of investment opportunities. Invest-Gate sits with Head of Savills Egypt Catesby Langer-Paget for a quick review on the market performance and forecast of the near future.
Why have you decided to venture the Egyptian Market?
The Egyptian market is showing very promising signs of expansion and is set to regain its position among the leading real estate markets within the region. The growth witnessed by the residential and commercial real estate market is driven by multiple factors through the government’s ambitious plans to address the increasing population including planning to build 20 new cities – expected to accommodate about 30 mn people in total, the largest of which will be the New Administrative Capital (NAC), east Cairo. To capitalize on this growth potential, Savills – the globally renowned player within the real estate sector – arrives in Egypt shortly after its acquisition of Cluttons Middle East. Savills’ entry into the Egyptian market is part of an ambitious expansion plan within the Middle East and North Africa (MENA) region. The agency aims to grow its regional capabilities and to play a key role in Egypt through catering to different stakeholders within the real estate market and supporting the property project lifecycle, alongside a robust service offering.
All in all, Savills aims to leverage its wide range of experience that will be of significant value for all the different stakeholders within the housing sector.
Are you marketing local projects among locals or foreign investors? And what is Savills’ scope exactly?
Savills is a global real estate services provider listed on the London Stock Exchange. The company has over 600 owned and associate offices and employs more than 30,000 people in more than 60 countries, with expertise spanning sales and leasing, valuation, feasibility studies, as well as, property and facilities management and research. Through these services, Savills is well positioned to offer an important contribution to support the growth of the main driving sector of Egypt’s economic recovery.
For instance, Savills just launched One Zamalek, a building it is managing and is located in one of the most prestigious areas in Cairo on the northern tip of Zamalek. The project features 21 exclusive apartments available for sale and they are already attracting a lot of interest, especially from GCC nationals.
On another note, the commercial real estate market will also be the main focus for Savills this year.
How do you assess the current and future of real estate in Egypt?
The market has, over the longer term, proven to be more resilient to economic shocks and a good hedge against currency devaluation. However, because so many of these properties have been bought by investors purely for capital appreciation purposes, it has led to a large number of properties currently sitting empty. It is important, especially with a young working population, that developers start to target the middle-to low-income buyers and that a proper mortgage market is established. Unfortunately, this is unlikely to happen until interest rates decrease significantly.
In 2019, it is not expected that there will be much underlying growth, but rather it is a time for stabilization following two years of rapid growth after the EGP Flotation in 2016. Attracting foreign buyers into the market can help bolster the real estate sector in this period. For foreign investment, it is critical that the market is seen as stable and transparent. Part of Savills’ role in the region will be to support initiatives that make information more readily available for potential investors, so that they can understand the upside of the Egyptian real estate industry. We are here to provide best practice, advice, and consultancy that allow a more informed approach to investment, whether that be from home-grown investors to those from further afield.
With regard to commercial real estate, we are seeing a lot of demand from international corporate occupiers. Savills has already been asked to asses two office requirements in excess of 10,000 square meters in the last six months alone. We just do not see requirements of this size regularly coming up in the rest of the region. An affordable, highly educated workforce makes Egypt a great place to set up a base from which to outsource services to the rest of the region. This also applies to manufacturing, shown by Mercedes-Benz’s recent announcement that they plan to build a new assembly plant in Egypt.