By Reem Hesham and Wael Hossam El-Din
According to JLL’s latest Egypt Construction Market Intelligence Report, the construction industry in Egypt, as the largest project market in Africa and the third largest in the Middle East and North Africa (MENA), is projected to experience consistent value growth until the end of the decade, Invest-Gate reports.
JLL’s Q1 2024 report, referencing insights from the latest Mordor Intelligence study, indicates that the construction industry in Egypt is forecasted to achieve a compounded annual growth rate exceeding 8% until 2029.
This growth is primarily driven by increased government spending, active public-private partnerships, the emergence of green buildings, a strong focus on infrastructure development, and continued investments in residential and mixed-use sectors.
Despite national and global economic challenges, the report highlights that Egypt holds a significant share of $515 bn (12%) of the unawarded projects in the MENA region, which is projected to total $3.9 tn.
Egypt ranks third in the MENA region after Saudi Arabia and the UAE, with residential projects accounting for approximately $36 bn (21%) of this share, while mixed-use projects represent $115 bn (22%).
The residential sector in the Egyptian capital, Cairo, has demonstrated resilience, as evidenced by the completion of over 7,000 units in Q1 2024, primarily within masterplan developments. The total stock of residential units in Cairo stands at approximately 276,000 units, with an additional 24,000 units expected to be delivered throughout 2024. JLL Research highlights significant year-on-year increases in average sale prices in 6th of October (83%) and New Cairo (95%), along with corresponding rental price rises.
In the tourism sector, Egypt experienced a promising start in 2024, supported by a new initiative involving a substantial EGP 50 billion investment to enhance the high-growth sector. In 2023, the tourism sector recorded a record performance with nearly 15 million visitors.
Furthermore, the government has introduced loan facilities and incentives to stimulate private sector participation and achieve the ambitious goal of increasing hotel capacity by nearly 250,000 keys, targeting 30 million visitors by 2028.
In addition, in Q1 2024, Cairo’s hotel stock remained stable at 26,700 keys, with 1,400 additional keys expected from new and renovated hotels later in the year.
Laura Morgan, Market Intelligence Lead MEA, Project & Development Services at JLL, commented on the market dynamics in Egypt saying “Currency volatility, inflation, regional and global geopolitical challenges are impacting market dynamics in Egypt, and the parallel market for the US dollar is leading to further price manipulation and greater market instability in the country’s construction sector. However, increased FDI commitments provide ample liquidity, and strategic government reforms are reducing market speculation, helping boost investor confidence. Drawing on the strengths of its tourism sector and in line with its Vision 2030 goals, Egypt continues to expand its construction sector through continued investments and partnerships to solidify its position as a leading market in the region.”
