Real Estate News, Reviews and Investment
Article: Demand for real estate units in Egypt far outstrips supply.
Two years of unrest have had a devastating effect on the economy of Egypt and the currency has depreciated by about 15%. Foreign reserves are at a critically low point effecting the ability of the government to import essential items such as wheat and fuel. The weakness of the currency is however good news for the real-estate market and investors with large savings who are trying to preserve the value of that money by investing in property assets.In addition to locals, the currency makes it that much more attractive for other investments from Arab countries especially the more unstable ones such as Libya, Sudan and Syria.
According to consultants Jones Lang LaSalle, prices for apartments in the upmarket suburb of New Cairo grew by 4% in the first quarter year on year.
Some developers have suspended work on large housing developments after courts or the government canceled land sales because they are accused of having paid too little because of the connivance of officials in the Mubarak regime.
Hard decisions need to be taken on reforming regulations but this is unlikely in the current scenario. Developers say that more roads need to be built to make land accessible but this again is unlikely in the current state of the economy
Residential real estate
With more political stability, there could be a great deal of potential for real estate investment in Egypt.
Experts believe that prices for residential property could rise as much as 20% this year partly because of increased construction costs.
The bottom line
Egypt has about 40 million real estate units (residential, commercial, tourist and industrial) registered with the authorities but the actual number is believed to be 30% in excess of this figure.
Egypt needs an estimated 800,000 new units a year but annual production is no more than 200,000 units. Real estate development therefore becomes a significant necessity.
In my opinion, the Egyptian real estate is a potentially lucrative investment if you have the appetite for the political and economic risk.