The long-term outlook on Egypt’s real estate market is positive, though the recent upheaval in the region has produced somewhat of a lost year. The tourism industry is expected to lead in the rebound of recovery for the country. Learn more about this in the full article from PropertyWire.
The real estate market in Egypt may be facing a lost year in 2011 as a result of the recent political upheaval but the longer term outlook is more positive, according to international property investment and advisory firm Jones Lang LaSalle.
JLL said in the short term real estate activity in Cairo would remain depressed due to the on going uncertainties dominating the post revolution period but analysts are predicting a positive medium to long term outlook for the Cairo real estate market.
‘2011 could therefore represent something of a lost year with decisions to lease or purchase real estate delayed until the ‘dust settles’ and greater certainty returns to the market after the elections later in the year,’ it said in a statement.
Irrespective of the recent developments, the basic fundamentals of the Cairo real estate market have not changed and looks positive for the medium to long term, according to Ayman Sami, head of Egypt Office, Jones Lang LaSalle MENA.
‘Egypt could emerge stronger eventually through greater transparency and business friendly policies. Such a scenario could make the country more attractive for business in the long term in comparison to the pre-revolution period,’ Sami added.
Although the first half of 2011 is expected to remain subdued, some sectors are expected to experience positive moment towards the end of the year, with the tourism industry, a key to Egypt’s Gross Domestic Product, expected to lead the rebound.
In the office sector, leasing activity is expected to regain momentum later in 2011 on the back of increasing availability of higher quality new supply and lower rents, JLL said.
‘Egypt was and will remain as one of the most attractive real estate markets in the MENA region in terms of its potential long term opportunities, growth and diversity. In the present climate, there remains (albeit reduced) liquidity in the system and those opportunistic investors currently active in the market could be rewarded by an ability to negotiate more attractive deals than those available at the end of 2010 before the recent unrest,’ explained Sami.
Indeed, the Cairo hotel market has been hit hard by the turbulence of political revolution, according to new data published by industry experts. Performance numbers indicate the Egyptian capital’s hotel occupancy levels have been falling continuously since January 29, four days after the first demonstrations started, according to STR Global.
But high demand from press and media organisations arriving to cover the news pushed up average daily rates, it added. By the end of February, hotel performance stabilised at very low levels, with occupancy below 20% and average room rates of approximately EGP750 ($126.79), which is on par with the same time last year, it said in its latest report that tracks the daily hotel performance from 24 hotels in Cairo.
Year to date through to March 07, occupancy in Cairo was 38%, ADR was EGP793 ($134) and RevPAR was EGP299 ($51), according to its report.
‘A stable and secure environment is needed to bring visitors back to Egypt, and whilst it is not yet certain when demand will return to normal levels, it is recommendable for the hotels to continue with their current strategy of not dropping average room rates, as it will not stimulate additional demand to counterbalance a potential drop in revenue per available room,’ said Elizabeth Randall, managing director of STR Global.
This article was republished with permission from PropertyWire.