Savills Egypt, the local office of the leading global real estate advisor, has unveiled its initial insights into the potential impacts of recent decisions by the Central Bank of Egypt (CBE) on the country’s real estate sector, Invest-Gate reports.
These decisions encompassed the floatation of the Egyptian Pound (EGP) on March 6, 2024, allowing the exchange rate to be determined by market forces. The floatation was accompanied by a 600 basis points interest rate hike.
Initially, these measures caused the value of the EGP against the US Dollar (USD) to decrease by 60% in order to address the parallel market. Currently, the currency is trading at EGP 47.35 against the USD.
Catesby Langer-Paget, Head of Savills Egypt Office, noted, “The floatation will make property in Egypt more appealing to international investors who were previously deterred from investing their foreign currency in Egypt due to uncertainty surrounding the future direction of the EGP. Real estate in Egypt will continue to attract foreign buyers and Egyptians residing abroad for various reasons, including lifestyle, tourism, and investment.”
One of the primary factors that makes Egypt appealing to international investors is its large and growing population. Egypt has the largest population in the Middle East and ranks 14th worldwide, with over 105 mn inhabitants.
According to the National Population Council, the population is projected to reach 157 mn by 2050 and 205 mn by 2100. This stands in stark contrast to countries like Japan and Italy, where populations are expected to significantly decline over the same period.
In the short term, Savills anticipates property prices to remain stable since developers had already taken into account the parallel market USD price when setting costs, which had reached highs of EGP 70 prior to the floatation. As long as the exchange rate remains below EGP 50, Savills does not anticipate a significant increase in real estate prices.
Furthermore, the measures implemented by the CBE are expected to discourage speculative buying, leading to a more sustainable market driven by genuine demand for residential and commercial properties. Langer-Paget stated, “We expect the real estate market to return to a more sustainable state as speculative buying behavior seeking quick returns diminishes significantly, and demand is driven by a genuine need for properties for individuals and families to reside in.”
