The recent EGP float has resulted in a 23% inflation, which is expected to increase to 25%, affecting the prices of residential units which have increased by 30%, according to JLL’s Head of MENA Research Craig Plumb who spoke at Cityscape’s Business Breakfast today about Egypt’s accomplishments in the real estate sector in Q4 of 2016 and the upcoming economic challenges that will meet the residential, tourism, retail, and office sectors.

“The inflation in Egypt is expected to reach a peak of 25%; however, it will decline later to reach 20%, creating stability as the flotation has solely benefited tourist arrivals, which are expected to increase in 2017 onwards, making it a prosperous sector– among others,” Plumb said.

Egypt has become 52% cheaper for foreign tourists following and Egyptian hotels are currently planning to renovate their existing properties in Cairo to increase profit instead of constructing new hotels.

He mentioned that the retail, residential and office sectors are experiencing price pressures, therefore making the tourism sector more positive in growing than those sectors in 2017.

Increases in the residential sectors has been tackled through flexible payment plans that encourage affordability, less unit measures, and high density land usage. Office rentals originally quoted in USD later resulted in effective doubling of occupancy costs portrayed in EGP, following the devaluation of the pound, according to JLL report on “The Cairo Real Estate Market 2016”.

“There hasn’t been a decrease in the supply of office spaces due to the 37,000 square meters offered in 2016 in Cairo, including 17,000 square meters provided through Majarrah Business Complex in Q4 alone,” Plumb added.

The retail sector also quoted rentals in USD, which has been challenged by some aspects following the float such as doubling rents. Retail tenants face trouble in import restrictions, an increase in the price of imported products, and a decrease in consumer demand as a result of high inflation.  

The Cityscape Group Business Breakfast today was a gathering of real estate developers, contractors, architects, small-medium enterprises, and the Egyptian Ministry of Housing, Utilities, and Urban Communities to discuss the recent challenges in the real estate and construction sectors following the recent economic challenges of imposed taxes, law amendments, and flotation of currency, alongside plans and expectations for the sector in 2017.