Egypt’s real estate market is picking up well despite hikes in prices that followed the EGP floatation in November 2016, the Financial Times states in a report quoting analysts.

With the pound having lost half of its value against the dollar and inflation running at 33%, property was seen by Egyptians as the primary repository of value.

High-end developers increased prices in nominal terms by an average of 30% compared with last year, the report quoted research by Arqaam Capital, a regional investment bank based in the United Arab Emirates.

Demand has been spurred by purchases from Egyptian expats whose dollar savings doubled as a result of the floatation.

Expat buyers now make up around 16% of Palm Hills Developments’ clients, compared to 8-9% in the past, according to the company’s co-CEO Tarek Abdel Rahman. The resilience of the market is mainly attributed to the paucity of supply in relation to growing demand.

Egypt’s property developers provide a maximum of 20,000 new units a year, Abdel Rahman said, adding that many are beyond the reach of poorer Egyptians. Demand from the middle- and upper-classes for new housing stock is in the order of 70,000- 80,000 units a year.

Many developers face pressure from rising costs that threatens margins, according to Mohammad Kamal, analyst at Arqaam.

In addition to higher costs due to high inflation, companies find borrowing more expensive because of the currency flotation, Abraj Misr Chairman Ali Rabie stated. High-interest deposit accounts that offer annual returns of 20% are competing with property as a haven for wealth and savings.

“There are no indications as of now to suggest any catalysts for a major correction of prices,” Kamal says, adding that “But I would say that developers are mindful of affordability and signalling that they are at the end of their pricing increases.”