Deutsche Bank - Egypt Real Estate - (6th of July 2010) - SODIC

More documents

Recommendations

Info

5 July 2010 Real Estate, Construction and Building Materials Egypt Real EstateKey themesSupportive demographics lead to strong domestic demandThe Egyptian property market has benefited from supportive demographic fundamentals,namely a large and growing (2%/year 2000-2006) population with a high proportion of youngpeople (62% under the age of 30). According to CAPMAS, in 2009, Egypt had the largestpopulation across the Arab countries with approximately 76m people (excluding above 6m+Egyptians abroad) or c.25% of the MENA population. Additionally, Egypt has the lowestproportion of expatriates (c.5% vs. 90+% for UAE) among the GCC countries, which webelieve creates a solid footing for sustainable organic demand for real estate.This demand for real estate can be gauged from the large and ever-growing population inCairo (where our developers under coverage mostly operate). According to the UN andCAPMAS, Greater Cairo is the 9 th largest metropolitan area in the world, with approximatelyc.20m residents in 2009 (originally designed for 5m people) or c.26% of Egypt’s population.Figure 29: Greater Cairo population (m)Figure 30: Greater Cairo population as a % of Egyptpopulation25.020.0Greater CairoPopulation26%15.010.05.0-200020012002200320042005200620072008E2009E2010E2011E2012E2013E2014EOther EgyptPopulation74%Source: United Nations, CAPMAS, Deutsche BankSource: United Nations, CAPMAS, Deutsche BankFigure 31: Egypt population by age – 2008Figure 32: Median age of population (years)Above 60 years7%4545-60 years31%Less than 15 years32%4035302515-30 years30%20EgyptOmanKSAIndiaBahrainWorldQatarUAEChinaUSUKSource: United NationsSource: United Nations, Deutsche BankDeutsche Bank AG/London Page 19
5 July 2010 Real Estate, Construction and Building Materials Egypt Real EstateA high proportion of young people naturally results in a high number of marriages/annum(c.540k/year in Egypt), which further supports demand for housing units (according to theArab/Muslim culture, children stay with their parents until marriage and then move out).Assuming the number of marriages is divided in the proportion of population distribution, thenumber of new marriages would lead to a demand for 140k new units/annum in Cairo.Assuming only 30% (because of affordability) of couples actually move out, this would itselfcreate a demand of c.42k units (25% of additional demand/year of c.151k assumed in ourmodel).Suburbanization leading to growth in Cairo outskirtsEgypt is seeing strong urbanization due to the migration of people from rural areas to urbanareas in search of work. Naturally Cairo, which is the economic centre stage of Egypt, hasalso seen urbanization and currently has one of the highest urban densities in the world.According to World Urban Areas, the urban population density of Cairo was 35,020 per km2in 2008. High urban density has led to suburbanization with the creation of satellite centres inthe East-West axis of Cairo, namely New Cairo, 6th of October, 10th of Ramadan, 15th ofMay etc., where homebuyers can fulfil their desire for better houses, higher living standardsand a comparatively lower population.Figure 33: Urban and rural population as % of totalFigure 34: Egypt to witness higher growth urbanizationrate100%5.0%90%4.5%80%4.0%70%60%50%40%30%20%10%0%1950195519601965197019751980198519901995200020052010201520202025203020352040204520503.5%3.0%2.5%2.0%1.5%1.0%0.5%0.0%19551960196519701975198019851990199520002005201020152020202520302035Rural populationUrban populationWorld - Urban population growth (CAGR)Egypt - Urban population growth (CAGR)Source: Population Division of the Department of Economic and Social Affairs of the United NationsSecretariat, World Population ProspectsSource: Population Division of the Department of Economic and Social Affairs of the United NationsSecretariat, World Population ProspectsEgyptians abroad form a key component of the property marketExpatriate Egyptians partially contribute to the housing demand in Egypt. The typical rationaleof the purchase is either to hold the property as an investment or to keep it for future use, incase the expatriate decides to settle back in Egypt. We estimate that expatriates Egyptiansrepresented approximately 6.5m of the population and remittances accounted for more than5% of GDP in 2008. In our coverage universe, expatriate Egyptians account for 5-10% of thebacklog.Page 20Deutsche Bank AG/London
Page 1: CompanyGlobal Markets ResearchMiddl
Page 4 and 5: 5 July 2010 Real Estate, Constructi
Page 9 and 10: Page 8 Deutsche Bank AG/LondonFigur
Page 19: 5 July 2010 Real Estate, Constructi
Page 67 and 68: Page 66 Deutsche Bank AG/LondonFigu
Page 71 and 72:
5 July 2010 Real Estate, Constructi
Page 73 and 74:
Page 75 and 76:
Page 77 and 78:
Page 79 and 80:
Page 81 and 82:
Page 83 and 84:
Page 85 and 86:
Page 87 and 88:
Page 89 and 90:
Page 91 and 92:
Page 93 and 94:
Page 95 and 96:
Page 97 and 98:
Page 99 and 100:
Page 101 and 102:
Page 103 and 104:
Page 105 and 106:
Page 107 and 108:
Page 109:
Deutsche Bank AG/LondonMiddle East
show all

Deutsche Bank - Egypt Real Estate - (6th of July 2010) - SODIC

Create successful ePaper yourself

Delete template?

Save as template?