Egypt Real Estate Market, a year after devaluation

The Egyptian real estate market has been undergoing significant changes in the past year, especially after the devaluation of the Egyptian pound (EGP) against the US dollar (USD) in March 2022. The devaluation was part of a series of economic reforms aimed at boosting exports, attracting foreign investments, and securing an IMF loan. However, it also had a major impact on the cost of construction materials, most of which are imported or linked to global prices. In this article, I will provide some updates on how the real estate sector in Egypt has been coping with these challenges and what opportunities lie ahead for investors and developers.

One of the main effects of the devaluation was the increase in prices of residential units, as developers had to pass on the higher costs of steel, cement, aluminum, and other materials to buyers. According to various sources, developers have increased prices between 25% and 50% on their new launches since March 2022. This has led to a rush of buyers who wanted to secure their units before further price hikes, as well as a surge in demand for ready-to-move-in properties that are less affected by inflation. As a result, some developers have reported record sales and revenues in 2022, despite the challenging economic conditions.

Devaluation attracted the attention of foreign investors who saw an opportunity to enter or expand their presence in the Egyptian real estate market at a lower entry cost. According to the Central Bank of Egypt, foreign direct investment (FDI) in Egypt increased by 14% year-on-year to reach $7.7 billion in fiscal year 2021/22 and is showing signs of more increase in 2022/23, with real estate being one of the main sectors that attracted FDI. Most of the Gulf owned developers announced several new projects for first and second homes during the past 12 months.

In conclusion, the Egyptian real estate market has shown remarkable resilience and adaptability so far in the face of the devaluation and its consequences. The sector has witnessed strong demand, high sales, and increased investments despite the inflationary pressures and economic uncertainties. However, there are also some challenges that need to be addressed, such as ensuring adequate supply of affordable housing units, improving infrastructure and utilities, and enhancing transparency and governance. The future outlook for the sector remains positive, as Egypt continues its economic recovery and structural reforms.

Amr M. Aboualam

LOTUS Management and Consulting