The global shift towards hybrid work models has prompted a reevaluation of traditional office spaces, with significant implications for commercial real estate markets worldwide. In Egypt, this transformation is particularly noteworthy as businesses and developers navigate the evolving landscape. This feature examines whether Egypt’s commercial real estate sector is adapting to these changes or facing a potential decline.

The Hybrid Work Revolution: A Global Perspective

The COVID-19 pandemic accelerated the adoption of hybrid work arrangements, leading to substantial changes in office space utilization globally. According to CBRE’s 2024–2025 Global Workplace & Occupancy Insights, hybrid work has initiated a balancing act between employers and employees, aiming to create effective workplaces that satisfy both parties’ needs. The report emphasizes aspects such as effective versus efficient metrics, strategic hybrid programs, the role of physical spaces, and the transformative power of technology and artificial intelligence (AI).

Additionally, CBRE’s findings indicate that office space utilization rates have declined significantly, with current rates under 40%, a 45% decrease from the pre-pandemic global average of 64%. This suggests that office attendance has plateaued, exposing an imbalance of space supply and demand.

Furthermore, a report by Moody’s Investors Service highlights that the increase in hybrid work arrangements has led to a reassessment of office space demand, with organizations evaluating the necessity of traditional office environments.

The Current State of Egypt’s Commercial Real Estate Sector

Market Size and Growth

Egypt’s commercial real estate market has shown resilience and growth in recent years. According to Statista, the commercial real estate market in Egypt is projected to reach a value of approximately $ 402.60 bn by 2025. It is expected to experience an annual growth rate (CAGR) of 7.57% from 2025 to 2029, leading to a market volume of $ 539.09 bn by 2029.

In a broader context, Egypt’s overall real estate market, encompassing both residential and commercial sectors, is anticipated to reach a value of $ 1.58 tn by 2025. The residential real estate sector is expected to dominate, with a projected market volume of $ 1.18 tn in 2025.

Is Hybrid Work Reshaping Office Spaces in Egypt?

While hybrid work has altered the traditional office landscape, it has not rendered physical workspaces obsolete. Instead, the sector is undergoing a transformation, adapting to new preferences and operational models.

The Resilience of Office Demand

Despite the rise of hybrid work, many Egyptian businesses continue to value in-person collaboration. Sectors such as finance, manufacturing, and government services maintain a preference for physical offices to facilitate operations and client interactions. Additionally, cultural factors in Egypt often favor face-to-face communication, making a fully remote model less prevalent.

Furthermore, the expansion of Egypt’s startup ecosystem and the entry of international firms, particularly in sectors like fintech and e-commerce, sustain the demand for office spaces tailored to collaborative and innovative work.

The Shift in Office Space Preferences

While the demand for office space persists, tenant preferences have evolved:

• Smaller, More Flexible Spaces: Companies are opting for modular offices that allow scalability based on workforce needs, aligning with the hybrid work model.
• Hybrid-Ready Workspaces: Office designs now emphasize meeting rooms, collaboration areas, and shared spaces over traditional fixed desks, accommodating both in-person and remote workers.
• Tech-Enabled Offices: There is an increased demand for smart office buildings equipped with high-speed internet, cloud-based security systems, and energy-efficient designs to support modern work requirements.

Opportunities in Egypt’s Commercial Real Estate Sector

In the Egyptian commercial real estate arena, numerous investment opportunities are emerging as a result of ongoing economic and urban development. These opportunities are diverse and capable of meeting the varied needs and aspirations of investors, enhancing the attractiveness of this sector. The most prominent investment opportunities include:

• Population Growth and Urban Expansion: The continuous demand for commercial real estate, such as modern offices and retail stores, is on the rise. Egypt’s significant population growth and urban expansion provide a strong foundation for investment.
• E-commerce and Supply Chains: The growing interest in e-commerce is opening up vast investment prospects in warehouses and logistics zones, responding to the ongoing need to improve supply chains.
• Innovative Real Estate Projects: These projects offer investors the chance to participate in pioneering developments that combine commerce, entertainment, and housing, promising lucrative investment returns.
• Trend Toward Economic Diversification: This trend enhances investment opportunities in sectors that support tourism and services, with the real estate sector emerging as a promising area for investment expansion.
• New Infrastructure Developments: These developments encourage real estate investments in areas undergoing intensive growth, such as the New Administrative Capital and new cities, making these areas more attractive to investors.

The Role of the New Administrative Capital

The development of the New Administrative Capital (NAC) is a pivotal factor influencing Egypt’s office space market. This ambitious project aims to relocate numerous public offices, ministries, and corporate headquarters to a modern, high-tech environment. While this may reduce office space demand in central Cairo, it presents new opportunities for commercial real estate developers in the NAC. The challenge lies in ensuring that businesses find the move financially viable and that the city attracts sufficient tenants to sustain long-term growth.

During MIPIM 2025, Eng. Khaled Abbas, Chairman and Managing Director of the Administrative Capital for Urban Development (ACUD), explained that over 15,000 people are now living in the NAC. He announced plans to begin the infrastructure for Phase 2 due to high demand from private sector developers, with 70% of the land already allocated for this phase. Abbas noted that the strong demand for the NAC prompted the decision to plan for Phase 2.

Abbas emphasized that the demand is primarily coming from Egyptians, as the population exceeds 100 mn and increases by more than 2.5 mn each year. This creates investment opportunities in residential, commercial, office, health, and education sectors, among others.

Challenges Facing Egypt’s Commercial Real Estate Market

Despite opportunities for adaptation, the sector faces significant challenges:

1. High Vacancy Rates: Certain office buildings, especially in older districts, struggle to attract tenants due to shifting demand patterns.
2. Economic Uncertainty: Inflation and currency fluctuations pose challenges for businesses considering long-term lease commitments.
3. Over-Supply of Traditional Offices: Continued development of conventional office spaces risks oversaturation if these do not align with evolving market demands.

Strategies for Adaptation and Growth

To remain relevant in the evolving landscape, stakeholders in Egypt’s commercial real estate sector are adopting various strategies:

• Embracing Flexibility: Developers are incorporating flexible office spaces into their portfolios to cater to the growing demand for hybrid work environments.
• Investing in Technology: Upgrading buildings with smart technologies enhances tenant experiences and meets the expectations of modern businesses.
• Focusing on Sustainability: Implementing green building practices attracts environmentally conscious tenants and aligns with global sustainability trends.
• Diversifying Portfolios: Exploring mixed-use developments that combine residential, commercial, and recreational spaces offers resilience against market fluctuations.

Conclusion

Hybrid work is transforming Egypt’s commercial real estate, driving demand for flexible and tech-enabled office spaces. While traditional offices adapt to new preferences, opportunities abound in innovative developments, particularly in the NAC. The sector faces challenges but remains poised for growth through adaptability and investment in modern solutions.