In Q2 2023, Cairo’s office sector saw only one notable project completion, adding about 37,500 square meters of office gross leasable area and bringing the total stock to around 1.94 million sqm, according to JLL’s The Cairo Real Estate Market overview report.

Another 193,000 sqm is expected in H2 as multiple project completions were pushed to 2024, mainly due to slow construction and delays.

Office landlords continued dictating terms, quoting rents in dollars, and limiting negotiations. While most offered fixed rates, some provided incentives like free parking. Very few also offered exchange rate caps on dollar rents.

Slow deals
Inquiries rose in Q2 versus Q1, but deals remained slow. Interest grew among international firms looking to establish Cairo call centers to tap attractive costs. This drove demand, mainly for grade B space.

Grade A activity was weaker amid slower demand. Average rents were stable annually at $363 per sqm. Limited prime office availability pushed prime rents up 10% to $510 per sqm. The average vacancy rate rose to 12% in Q2 from 10% a year earlier.

Over 6,000 residential units were completed in Q2, lifting the total stock to around 255,000 units as major developers strived to finish projects on time. Another 25,000 units should arrive later this year.

Moderate sales
Overall Cairo sales stayed subdued in Q2, though some investors continued to hedge against devaluation. Secondary market momentum outpaced primary deals as individual sellers proved more flexible on prices.

Significantly inflated prices lifted average rates by 38% annually in the 6th October City and New Cairo. Economic turmoil makes pricing difficult, pushing many sellers to wait for conditions to improve.

Apartment demand continued outpacing villas given restrained purchasing power, so apartment prices rose faster. Prime location compounds with limited inventory saw sharp price spikes.

Rentals on the rise
Cairo’s rental market saw healthy Q2 demand, driving rents up 19% in 6th October and 17% in New Cairo. New Cairo lagged as supply outpaced 6th October.

Over 11,000 sqm of retail space was completed in Q2, taking total inventory to about 2.9 million sqm. Another 155,000 sqm should arrive in H2. Smaller community malls dominated H1 completions given easier leasing and access. Larger malls saw muted activity.

Average rents for primary and secondary malls both rose 9% annually amid inflation and a weak economy rather than stronger demand. The average vacancy rate ticked down to 9% from 10%.

Hospitality is stuck
Cairo’s hotel stock held 28,000 keys in Q2 as no new supply was added. H2 should see almost 900 keys, including renovations. Domestic and foreign tourist activity usually peaks in coastal cities in summer.

Q2 saw healthy tourist inflows to Cairo on government and private sector promotions. Recently eased visa rules for some nationalities should further boost arrivals. Saudi budget airline Flynas launched new Cairo flights, expected to ease operations and lift tourism.

Cairo’s occupancy rate grew at a slower pace to 68% for the year to June 2023, versus 62% a year earlier. The average daily rate rose nearly 3% while RevPAR climbed about 7% to around $95. The government aims to continue hospitality growth through reforms to enhance the legislative framework and draw investment.