Market Trends of Egypt Residential Real Estate Industry
Increasing Private Investment in Real Estate Sector Driving the Market
The Egyptian real estate sector is one of the country's hottest investment areas. Property growth rates surpassed 15% in 2021, according to the Ministry of Planning and International Cooperation. The sector has benefited from the uncertainty and instability of regional and global economic challenges. However, these broad trends need to provide a complete picture of demand. They only provide a partial picture because they only represent the formal market, which serves a small portion of society.
On the other hand, there is evidence of a trend in this market segment toward flipping properties. This suggests that the standard metrics for assessing demand based on income and savings may need to be revised in specific market areas. Finally, despite the increased tendency toward speculation at the higher end of the market, Egypt has a sizable core of domestic end-users, ensuring a strong demand that ultimately benefits developers in the long run. These trends indicate increased opportunities for home purchases in Egypt.
While demand appears to be present, unit prices are beginning to exacerbate the affordability issue. Housing will continue to be in high demand as the country's population grows by 2.5 million per year and one million marriages occur. The development of several megaprojects, including expanding special economic zones, stimulates economic growth. Other measures to encourage economic growth include the Suez Canal, New Alamein City, and the New Administrative Capital. For example, the current authorization to use the land for public-private partnerships, combined with fundamentally solid local demand, will boost the housing market.
Growth in the Luxury Housing Market
Real estate in Egypt is popular among locals and foreigners, particularly in Red Sea resort areas. Demand from Russians, for example, increased by 49% in Q1 2022 compared to the same period last year. People are increasingly looking to buy real estate in Egypt rather than simply renting a vacation home. Price increases also contributed to the Egyptian pound's decline against the United States Dollar. In general, sales are active across the board. The resort of Makadi is experiencing significant dynamics.
Prices are rising in the primary and secondary markets in Hurghada. The increase in the primary market is partly due to rising building material prices. The most liquid objects in any market are studios and one-bedroom apartments, but two-bedroom apartments are also in high demand. The buyers are primarily from nearby countries, including Europe, the United Kingdom, Russia, Ukraine, and the Middle East. Many Egyptians from all over the country are also interested in purchasing a "summer house on the Red Sea."
Egypt's real estate market attracts buyers, but prices remain relatively low compared to other countries. Plus, there's a season all year, low living costs, and the Red Sea. The state is now investing heavily in the infrastructure of all regions of Egypt, constructing entire cities rather than just complexes. A new mini-city with lagoons, all infrastructure, international exhibition centers, and even an opera has been announced for the Sahl Hasheesh region. El Gouna also sees the construction of the luxury resort Soma Bay and numerous new projects.
