September 2015

solmohamed

greater-cairo-market-overview-sep2015

Real Estate Overview Report Greater Cairo | Real Estate 2015

Accelerating success.

Greater Cairo Real Estate Market Overview

September 2015

Greater Cairo | Real Estate Market Overview | 2015 | Colliers International

1 Greater Cairo | Real Estate Market Overview | 2015 | Colliers International


Colliers International Service Lines

> Commercial Valuations

Mixed Use

Developments

Retail

Hospitality

> Residential Valuations

> Hospitality

> Healthcare and Education

Healthcare

& Life

Sciences

Education

& Human

Capital

Infrastructure

& Public Private

Partnership

> Development Solutions

> Retail Advisory

> Retail Leasing

Airport Cities

& City Centres

Ports and

Waterfront

Development

Industrial

&Special

Economic Zones

> Corporate Solutions

> Property Management

> Sales and Leasing

Leisure, Tourism

& Culture

Development

Entertainment

Sports Cities

2 Greater Cairo | Real Estate Market Overview | 2015 | Colliers International


ian.albert@colliers.com

3 Greater Cairo | Real Estate Market Overview | 2015 | Colliers International


Introduction

Real estate has shown resilience despite political turmoil

witnessed across the country over the past four years. Many

investors capitalised on real estate (primarily in the residential

market) as a hedge against currency risks and inflation with

the concurrent rise in the values of property acting as a

buffer. Identifying this growing market segment developers

successfully focused on delivering housing units targeting the

upper- mid and high- end consumer groups.

Since 2014 however, Cairo witnessed increased consumer

confidence and economic stability driven partially by

externally supported ambitious government economic centric

investments, aimed at the country’s infrastructure, and the

announcement of a number of new real estate projects.

This has translated into renewed investor confidence and in

positive inflows into the retail and tourism markets.

Ian Albert

Regional Director (MENA)

Valuations and Advisory

Colliers International

ian.albert@colliers.com

The retail market which was historically dominated by

traditional souks and high street retail continues to transform,

reflecting the changing society and sentiment. In particular

Greater Cairo has witnessed a rapid growth in international

standard shopping malls and more recently a focus towards

high-end retailing.

Tourism has also witnessed a revival with significant

increases in visitors resulting in a positive impact on Egypt’s

hotel market. Although the number of inbound tourists

remained constant in 2014 when compared with the previous

year, total tourism spending surpassed 2008 figures. High

occupancy rates and increased average length of stay

across hospitality establishments have not gone unnoticed

by hotel investors/ operators, with a number of high profile

international brands such as the Ritz Carlton, St Regis and

the Westin entering the Cairo market further supporting the

positive sentiment.

Investment extends beyond retail and hospitality with mega

projects such as Cairo Airport City and the Suez Canal

Expansion driving economic growth and the consequential

demand for additional housing, retail and social infrastructure.

Egypt’s large consumer base, positive investor confidence,

economic climate that encourages taxation breaks and low

labor costs, together with a growing middle class, underline

optimistic trends benefitting Greater Cairo’s real estate market.

4 Greater Cairo | Real Estate Market Overview | 2015 | Colliers International


Residential

Market Overview

5 Greater Cairo | Real Estate Market Overview | 2015 | Colliers International


The Residential Market

Appreciating house prices have driven investments towards

Cairo’s undersupplied residential market, as the best hedge

against high inflation rates and risks of currency devaluation.

Upper- mid and high income residents with sufficient

disposable incomes were targeted by key developers, and

Cairo witnessed a significant increase in upper- mid and high

income units.

Mansoor Ahmed

Director | Development Solutions

Colliers International

mansoor.ahmed@colliers.com

Although the volume of residential transactions remain

subdued due to the on- going political instability, investor

confidence has increased significantly since 2014. In contrast

to other regional markets such as Dubai and Abu Dhabi where

price appreciation has been driven primarily by a combination

of expatriate demand and investor speculation, we see that

the upward movement in Greater Cairo’s housing market is

underpinned by sustained local demand and un- met supply

fundamentals. Moreover, the favourable demographics in

Egypt - the young population profile composing of 32%

under the age of 15, suggests a continuously growing

residential market.

Overall market performance across Cairo’s residential sales

and rental market have improved significantly since 2013.

Sales prices across apartments and villas increased by 27%

and 64% respectively during the said period. Average rental

rates on the other hand increased by 14% across apartments,

while villas witness a marginal drop during the same period.

This marginal decline in villa prices was primarily driven by

the drop seen in Zamalek, while prices increased across

other areas.

Based on current trends, we estimate that the residential

market requires an additional 500,000 units by 2020.

This constitutes to approximately 90,000 – 100,000 units

every year. Based on historic trends however, average new

supply released into the market annually is approximately

45,000 units, meeting only 50% of the required housing units.

Given the significant income disparity, residential demand

in Greater Cairo is clearly delineated by income groups,

with nearly 70% of residents who can afford unit prices

below US$ 58,000. The movement of wealthy and uppermiddle

income Cairenes to the new communities in order to

escape congestion in central Cairo on the one hand, and the

continuous housing needs of Cairo’s mid- income segments on

the other, constitutes the defining demand drivers of the

local residential real estate market.

6 Greater Cairo | Real Estate Market Overview | 2015 | Colliers International


Residential Sector

Overview

SECTOR DEFINITION

In a city market with over 17 million residents, and a

population growing at 2% every year, the need for housing

units are constant on the rise.

There is also notable a relocation of upper-middle and high

income households towards the new communities such as

New Cairo, 6 th of October City and Al Obour City in order to

escape congestion in central Greater Cairo.

DEMAND

Based on population growth rates, on average 90,000 –

100,000 units are required every year to meet the demand

generated by new households alone.

The pronounced housing need however is skewed towards

more affordable housing for Greater Cairo’s middle income

residents, representing 77% of Greater Cairo’s population.

Population (Millions)

25

20

15

10

5

GREATER CAIRO POPULATION ESTIMATES

CAGR 2%

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Source: Colliers International Research and Analysis

16%

Economic

Housing

5%

Low Cost

Housing

DEMAND FOR ACCOMMODATION

BY HOUSING LEVEL IN GREATER CAIRO

Source: Colliers International Research and Analysis

77%

Middle

Housing

2%

Luxury

Housing

Income levels of this majority range between US$ 5,000 and

US$ 65,000 per annum, and affordability is limited to units

priced below US$ 151,000.

80

RESIDENTIAL SUPPLY – ANNUAL COMPLETION

Low Cost Level

Economic Level

SUPPLY

In 2014, the total existing residential supply exceeded

5.2 million units.

Units (Thousands)

60

40

Middle Level

Upper Middle Level

Luxury Level

On average, 45,000 new units enter the residential market

annually, with a high concentration on economic housing

projects sponsored by the government.

20

2009 2010 2011 2012 2013 2014

Source: Colliers International Research and Analysis

Upmarket core

of 6 th of October

City are the gated

communities such

as Palm Hills and

Beverley Hills

6 th of October

Increasingly housing

upper-middle

income demographic

as high-income

earners relocate

elsewhere given

chronic congestion

problems

One of

central Cairo’s

most upmarket

locations

Zamalek

Mohandessein

Primarily

residential area

catering to the

high income

segment

Close proximity

to airport has

effected a notable

business

orientation

Maadi

Heliopolis

Nasr City

New Cairo

Primarily

targeting

upper- mid and

high- end

residents

7 Greater Cairo | Real Estate Market Overview | 2015 | Colliers International


Residential

Sector Overview

MARKET GAP

Based on the current trends, the residential market

requires an additional of 500,000 units by 2020.

20

Million

Population

MARKET GAP - 2020

6Million

Units Housing

Demand

0.5

Million

Units Additional

Supply Required

With government sponsored programs aimed at

economic housing, and key developers launching

projects targeting high- income residents, the market

gap for affordable housing targeting the majority of

middle income residents remains unmet.

MARKET PERFORMANCE

Average sales prices for apartments and villas

increased by 27% and 64% respectively since 2013.

Average rental rates for apartments increased by

14% during the same period. The most significant

increases were observed in 6 th of October City and

in Heliopolis.

Unlike apartments, average rental for villas have

witnessed a drop of 4% since 2013. This drop is

driven by falling prices in Zamalek, with prices rising

in the other areas.

27%

Change

2013-2015

Average

Apartment

Sales Price

US$ 870/m²

RESIDENTIAL MARKET PERFORMANCE

Sales Market

64%

Change

2013-2015

Average

Villas

Sales Price

US$ 2,000/m²

Source: Colliers International Research and Analysis

14%

Change

2013-2015

Average

Apartment

Rent

US$ 55/m²

Per Annum

Rental Market

POTENTIAL OPPORTUNITIES

-4%

Change

2013-2015

Average

Villa

Rent

US$ 90/m²

Per Annum

Based on the market gap of each housing category, the following

opportunities are highlighted.

MARKET OPPORTUNITIES

Based on households income levels, the majority

of demand exists across middle income residents

(77%), although there still remains unmet demand

for upper-mid/ luxury housing units, given the

number of high-net-worth wealthy Egyptians in

the market.

Low income housing units also remain

undersupplied, although not as pronounced as the

market gap across the middle income sector.

Upper- mid /

Luxury Housing

Middle

Housing

Low Cost

Housing

Targeting households with annual income of

US$65,000 – US$125,000

Targeting households with annual income of

US$10,000 – US$25,000

Targeting households with annual income of

US$1,750 – US$2,500

Source: Colliers International Research and Analysis

8 Greater Cairo | Real Estate Market Overview | 2015 | Colliers International


Retail Market

Overview

9 Greater Cairo | Real Estate Market Overview | 2015 | Colliers International


The Retail Market

Driven by significant income disparities, Cairo’s retail market

is fragmented between souks, high streets and international

quality shopping malls.

Historically, the market’s growth has been cumbersome and

cautious, due to slow economic growth and high tariffs on

imported goods. However, over the past decade, the market

landscape has witnessed major transformations, supported

by substantial economic and tax reforms. Consequently,

consumer confidence increased notably, which triggered the

interest of regional and international retailers to enter the

market and capitalise on the large consumer base.

Stuart Gissing

Regional Director

Colliers International

stuart.gissing@colliers.com

The average rental rates across Cairo’s shopping malls range

between EGP 4,500 (US$ 625) per m² per annum and EGP

8,500 (US$ 1,190) per m² per annum, with established Grade

A shopping malls operating close to full occupancy.

The increasing competitive landscape however, has seen

Grade B malls experiencing low occupancy - up to 40%

available lettable area. Rents are expected to reflect

occupancy levels, with average rents across established,

well positioned shopping malls set to increase and maintain

a premium over less competitive malls.

Generations X and Y represent 56% of Greater Cairo’s total

population. The importance of this demographic is their

aspiration for lifestyle products and international brands.

This increasing consumer demographic also accounts for

the highest dwell time, and therefore F&B/ dinning and

entertainment products are some of the key retail components

to be factored into next generation shopping malls.

Colliers expects Greater Cairo’s organised retail market

to remain undersupplied over the short to medium term.

According to existing market sentiments, the market will be in

a position to absorb an additional 1.6 million m² GLA of new

supply by 2020. Increasing catchment population around new

residential communities will also see an offshoot demand for

a number of community shopping malls to be developed.

It is expected that, given Cairo’s growing population, young

demographics and a growing middle class, primary grade

lifestyle shopping malls with family entertainment components

will attract high visitor volumes, occupancy rates and rentals

compared to less competitive malls.

10 Greater Cairo | Real Estate Market Overview | 2015 | Colliers International


Retail Sector

Overview

BREAKDOWN OF HOUSEHOLDS’ RETAIL SPENDING

Retail

Spending

51%

SECTOR DEFINITION

Being one of the largest retail market in the region, the

consumer base for Greater Cairo alone, exceeds 17 million,

making it an attractive market for international and

regional retailers.

Shopping malls have successfully attracted international

brands, meeting latent demand from wealthy Egyptians,

and offer a shopping experience modelled on international

retailing standards with compiled tenant mixes, food courts,

entertainment facilities, and anchor tenants.

Food &

Non-Alcoholic

Drinks

67%

Restaurants

& Hotels

8%

Source: BMI; Colliers International Analysis

Furnishing &

Home

8%

Tobacco

& Alcoholic

Drinks

7%

Clothing &

Footwear

10%

DEMAND

2 600 000

2 400 000

RETAIL DEMAND

CAGR 3%

Significant income disparities have resulted in consumers

being highly price- sensitive and with traditional shopping

habits, on one hand, and organised shopping mall activity

on the other.

GLA (m²)

2 200 000

2 000 000

1 800 000

Currently, the demand for organised retail in Greater Cairo is

estimated at 2.2 million m² GLA, and is expected to reach 2.4

million m² GLA by 2020.

2014 2015 2016 2017 2018 2019 2020

Source: Colliers International Research and Analysis

SUPPLY

By end of 2015, the total organized retail supply in Greater

Cairo is expected to reach 1.1 million m² GLA.

An additional supply of 600,000 m² GLA is scheduled to come

into the market over the next five years, provided construction

timelines are met.

GLA (m²)

2018

2017

2016

2015

2014

RETAIL SUPPLY - ANNUAL COMPLETION

50 000 100 000 150 000 200 000 250 000

Source: Colliers International Research and Analysis

Golf City Mall

Designopolis Mall

Dolphin Land Mall

Cityscape Mall

Dandy Mall

Hyper One

Mall of Arabia

Nile City

Towers

As highlighted in

the map, 6th of

October City and New

Cairo hold the majority of

the existing retail supply

across different retail

formats within Greater

Cairo, given the availability

of land supply.

Sun City Mall

First

Mall

City Stars

Maadi

City Centre

The District

Emerald

Mall

Rehab Mall

(1 & 2)

Porto Cairo

Cairo Festival City

Downtown Mall

11 Greater Cairo | Real Estate Market Overview | 2015 | Colliers International


Retail Sector

Overview

MARKET GAP

The retail market is currently undersupplied by approximately

1.3 million m² GLA.

1.5

million m²

GLA

2010

MARKET GAP

1.3

million m²

GLA

2015

1

million m²

GLA

2020

Despite an additional supply of 600,000 m² GLA expected

to come online over the next five years, the market is still

expected to remain undersupplied by 1 million m² GLA

by 2020.

MARKET PERFORMANCE

The average rental rates in key shopping malls range between

US$408 per m² per annum and US$1,200 per m² per annum.

City Stars, Cairo Festival City and Mall of Arabia are achieving

the highest rentals, while secondary malls such as Golf City

Mall and Sky Plaza are witnessing some of the lowest

lease rates.

Occupancy levels for Grade A shopping malls range between

80% to full occupancy.

1, 500

1 000

500

AVERAGE RENTAL RATES FOR KEY

SHOPPING MALLS (US$/M²/ANNUM)

City Stars

Cairo Festival

City

Occupancy Rate

Golf City Mall

Dandy Mall

Maadi City

Source: Colliers International Research and Analysis

Centre

US$/m²/Annum

MARKET OPPORTUNITIES

Given Cairo’s growing population and composition of

generations X & Y, primary grade lifestyle shopping malls

complete with family entertainment components will attract

high visitor volumes, occupancy rates and rentals.

DEVELOPMENT TIPS

Target

Young

Consumers

Young consumers (20- 39 years of age)

represent 47% of total population, driving

demand for brands coming into the market

Community

Retail

Demand for retail components within

residential communities to meet everyday

needs of the catchment population.

0-1

1-3

3-6

6-9

9-12

12-15

15-30

30-45

45-65

65-85

85-100

Mall of Arabia

Porto Cairo

Sky Plaza

Galleria40

Average

100%

80%

60%

40%

20%

0%

Largest demographics are between the

ages of 15 – 64

Lifestyle

Retail

Source: Colliers International Research and Analysis

The higher proportion of generation X & Y

consumers and their preferences to spend

more time dining and entertaining outside,

make it more likely for the F&B and the

entertainment components within shopping

malls to increase

12 Greater Cairo | Real Estate Market Overview | 2015 | Colliers International


Hospitality Market

Overview

13 Greater Cairo | Real Estate Market Overview | 2015 | Colliers International


The Hospitality

Market

In the first half of 2015, the number of room nights sold in

Egypt’s key cities (Cairo, Alexandria, Hurghada, Sharm El

Sheikh, Luxor) grew by 13% year- on- year. Cairo in particular

saw a 39% increase in demand, while Hurghada experienced

a decrease of 7% due to strong competition with Sharm

El Sheikh.

Filippo Sona

Director | Head of Hotels

Colliers International

filippo.sona@colliers.com

In another positive move for the tourism industry, August

2015 saw Germany lift its travel ban on all tourist destinations

in Egypt. The lift is expected to lead to higher visitation figures

from this key source market, which contributed approximately

800,000 tourists and EGP 2 billion (US$255 million) in

revenues during 2014. Germans’ length of stay is also

expected to increase from its current average of one week,

slowly returning to the two week stays witnessed in 2010.

In addition to the traditional source markets, the ministry of

tourism is aiming to diversify its demand base, for instance

by targeting 200,000 Iranian tourists by 2016, and 1 million

Indian tourists by 2017. The tourism authorities are bullishly

targeting a total 20 million tourists by 2020, up from

9.8 million in 2014.

The improved confidence in the hotel industry is apparent

through the recent signings of international hotel brands, such

as the Swissotel Katameya in Cairo, the DoubleTree by Hilton

in Ain Al Sokhna, and the Westin Resort in Soma Bay. With

the recovery in full swing, hotel investors interested in Egypt

are now reaching their highest level of confidence in the last

four years.

14 Greater Cairo | Real Estate Market Overview | 2015 | Colliers International


Hospitality Sector

Overview

HOSPITALITY LAND SCAPE OF CAIRO

70%

5 STAR

SECTOR LANDSCAPE

Egypt relies heavily on its tourism sector which accounted for

over 5% of the nation’s GDP in 2014.

Despite benefitting from a wide tourism market, Egypt’s

internationally branded hotel supply is heavily weighted

towards the 5-star segment providing various hotel

development opportunities across other segments.

DEMAND

With the exception of the Pyramids market, all other hotel

submarkets of Cairo rely on corporate travelers.

Hotel demand has seen a notable shift towards eastern (New

Cairo) and Western (6 th of October City) Cairo in recent years.

This shift is due to new business parks providing high quality

office spaces and thus appealing to high-profile companies.

SUPPLY

Supply remained stable between Q2 2014 and Q2 2015.

However six hotels are expected to enter the market by year

end 2015, operated by Marriott International, Starwood Hotels,

Time Hotels, Kempinski, and Hilton Worldwide.

Internationally branded supply currently represents 64% of

Cairo’s hotel market, of which 86% are 5-star rated.

20%

4 STAR

Source: Colliers International

70%

CORPORATE

9%

FIT

2%

OTHERS

Source: Colliers International

PURPOSE OF VISIT TO CAIRO

4%

MICE/

Groups

PROJECTED HOTEL SUPPLY | NO. OF KEYS

CAGR 5%

10%

3 STAR

15%

LEISURE

Q2

2014

Q2

2015

Source: Colliers International

Note: Includes 3,4 and 5-star quality supply

FY

2015

(f)

FY

2016

(f)

FY

2017

(f)

Heliopolis

Zamalek

Mohandessein

Nasr City

New Cairo

6 th of October

Maadi

15 Greater Cairo | Real Estate Market Overview | 2015 | Colliers International


Hospitality Sector

Overview

MARKET GAP

Colliers expects a 7.5% average annual increase in Cairo’s

hospitality demand over the next five to ten year period, inline

with Euromonitor’s tourism projections for Egypt.

Given the above mentioned demand growth, Cairo’s hotel

market will need an additional 10,540 keys over and above

the announced supply by 2025.

ADDITIONAL SUPPORTABLE ROOMS

14,321

Projected

Keys

2015

Source: Colliers International

2,018

Additional

supportable

keys

2020

10,540

Additional

supportable

keys

2025

KPIs | YOY % CHANGE

MARKET PERFORMANCE

Growth in corporate demand has fueled Cairo’s hotel market

performance increase in Q2 2015.

OCC

-14% +6% +43%

+26%

Occ 50%

Cairo’s hospitality demand is mainly generated by Egyptian

and GCC nationals, accounting for 78% of total guest nights.

+29% +1% +8%

+26%

US$117

MARKET OPPORTUNITIES

Due to the large number of currently outdated, and new

forthcoming 5- star supply, opportunity lies in developing

economy and midscale hotels targeting leisure tourists

visiting the pyramids.

Lack of quality serviced apartments appealing to domestic

leisure tourists represents an opportunity for international

operators to penetrate the market.

ADR

RevPAR

Q2 2013 Q2 2014 Q2 2015 Forecast

FY 2015

Source: STR Global, Colliers International

DEVELOPMENT TIPS

Midscale &

Economy

Hotels

In locations near the pyramids

catering to the leisure segment

Upscale

Hotels

In 6 th of October City and 5th

Settlement districts to cater to the

Upscale business parks

Serviced

Apartments

Within Ma’adi district to cater to

relocating employees

16 Greater Cairo | Real Estate Market Overview | 2015 | Colliers International


Commercial (Offices)

Market Overview

17 Greater Cairo | Real Estate Market Overview | 2015 | Colliers International


The Commercial

(Office) Market

Cairo is the acknowledged financial and business centre

of Egypt. However the city does not have a clearly defined

Central Business District (CBD) as compared to other

international and regional cities. Grade A office space

currently available for lease within Greater Cairo is located

on major commercial arteries that also hold a significant

proportion of Cairo’s Grade B office stock.

Hassan Abou Alam

Senior Manager | Business Development

Colliers International

hassan.aboualam@colliers.com

High occupancy rates across Cairo’s limited Grade A office

stock has prompted the conversion of ground floor residential

developments into office space as a short-term measure to

counter the undersupplied market. However, this has only

intensified the existing fragmentation of the office market in

Greater Cairo.

The existing undersupplied market is supported by rising

rental levels. The average rental rates of office space in key

areas within Greater Cairo range between US$300 per m²

per annum and US$ 350 per m² per annum in 2015,

increasing 6% since 2014.

We are continuing to witness significant demand for office

space in new cities from local business entities who are

willing to relocate to new offices in less congested areas and

into developments with better build quality. In the absence

of a defined CBD within Greater Cairo, New Cairo has

emerged lately as the capital’s CBD assisted by its location -

adequate infrastructure, ease of access, proximity to the Cairo

International Airport, and the availability of supporting services.

The market is expected to remain undersupplied in the short

to medium term, with an additional 3.1 million m² NLA of

new supply required by 2020. We expect rentals to remain

strong, especially across developments offering international

build quality in districts away from highly dense areas of the

traditional city centre.

18 Greater Cairo | Real Estate Market Overview | 2015 | Colliers International


Commercial (Office)

Sector Overview

GRADE A OFFICE DEMAND

SECTOR DEFINITION

Egypt’s economy is the third largest in the Arab world, only

behind KSA and the UAE.

Despite a labour force of 4.5 million, the city remains

fragmented in terms of a Central Business District (CBD).

New Cairo and 6 th of October City currently holds

approximately 2 million m² NLA of Greater Cairo’s formal

office supply.

5 100 000

4 800 000

GRADE A OFFICE DEMAND

CAGR 2%

DEMAND

Demand for office space is driven by the volume of workers

who actually require office space.

NLA (m²)

4 500 000

4 200 000

3 900 000

Tenants are considering New Cairo and 6 th of October

City as favourable commercial districts, given their ease of

accessibility and better building quality in comparison with

older areas like Maadi and El Dokki.

With demand expected to increase 2% annually, by 2020

cumulative office demand is expected to reach 4.7 million

m² NLA.

2014 2015 2016 2017 2018 2019 2020

Source: Colliers International Research and Analysis

GRADE A OFFICE SUPPLY - ANNUAL COMPLETION

SUPPLY

Based on Colliers research, more than 800,000 m² office

space are expected to be completed over 2015 – 2018. There

are currently no upcoming developments planned for delivery

between 2019 and 2020.

NLA (m²)

2018

2017

2016

2015

2014

Provided construction timelines are met, cumulative office

supply is expected to reach approximately 2.3 million m² NLA

over the next 5 years.

100 000 200 000 300 000 400 000 500 000

Source: Colliers International Research and Analysis

Heliopolis

Moving

away from

traditional

business

centres

Zamalek

Mohandessein

Nasr City

New Cairo

6 th of October

Maadi

19 Greater Cairo | Real Estate Market Overview | 2015 | Colliers International


Commercial (Office)

Sector Overview

MARKET GAP

Currently, formal office supply in Greater Cairo is witnessing

a shortfall of approximately 2.7 million m² NLA. This

undersupply is expected to narrow down to 2.4 million by

2020, provided construction timelines are met.

Despite nearly 800,000 m² NLA expected to come online

during 2015 – 2020, the market still requires an additional

480,000 m² of formal office space to be delivered annually in

order to meet market equilibrium in 2020.

MARKET PERFORMANCE

Average rental rates of office space in key areas within

Greater Cairo range between US$300 per m² per annum and

US$350 per m² per annum. The highest rentals are achieved

in New Cairo, averaging at US$ 370 per m² per annum.

The overall market witnessed an average rental growth of 6%

during 2014 – 2015, underpinned by the limited primary grade

office stock in the market.

MARKET OPPORTUNITIES

With demand for office space expected to outweigh supply

over the next five years, there is a potential market gap that

can be met by new primary grade office space.

Tenants are likely to prefer locations away from the traditional

city centre in order to avoid severer traffic congestion and

pollution experienced in the downtown areas of Cairo.

1.8

million m²

NLA

2010

MARKET GAP

2.7

million m²

NLA

2015

2.4

million m²

NLA

2020

AVERAGE RENTAL RATE FOR

GRADE A OFFICES(US$/M²/ANNUM)

AND OCCUPANCY LEVEL

Rental Market

6%

% Change

2015

Av. Office Rent

US$ 340/m²

Per Annum

Occupancy Level

70%

to

80%

Occupancy

Level 2015

Source: Colliers International Research and Analysis

PROMISING MARKETS

New

90 th The demand for commercial lands in

Cairo New Cairo is towards the 90th street,

given the majority of commercial

developments are located in the vicinity

6 th

6th of

October

City

6 th of October City is another key

location for residential and commercial

land demand, based on Colliers ground

research

Source: Colliers International Research and Analysis

20 Greater Cairo | Real Estate Market Overview | 2015 | Colliers International


Mega Projects -

Market Insights

A number of national mega projects are planned and

implemented including Cairo Airport City, Suez Canal

expansion, and New Capital City that are likely to drive

demand for additional real estate products.

SUEZ CANAL EXPANSION

The Suez Canal expansion will increase the Canal’s annual

revenues from US$5.3 billion to approximately US$13.2 billion

in 2023. According to the Suez Canal Authority’s projections,

daily transits will rise from their current level of 49 ships to

97 ships by 2023.

One of the canal expansion’s positive impacts is a planned

scheme of establishing an airport in Ain Sokhna. This will

enhance the corporate demand for residential, commercial,

retail, education and healthcare facilities along with hotel

rooms, especially in the East side of the City Centre. Airports

and aviation sector around the Suez Canal are also planned to

compliment the major investment being made to expand the

Suez Canal.

CAIRO AIRPORT CITY

Cairo Airport City is aimed at positioning Cairo as the

centre of the region through a series of logistical, retail, and

recreational developments. There is a study to link the Airport

City with the new Suez Canal through a new railway line with

Ain Sokhna port, and Cairo International Airport. Cairo Airport

is likely to be a major assembly and distribution centre of

passengers and cargos.

The Airport City is a complete city around the airport and

will include a new trade free zone, cargo village, factories

belonging to the civil aviation for packaging, and food outlets.

In addition, an entertainment area, administrative offices,

hotels and a hospital are planned or under construction. The

project is expected to provide more than 120,000 jobs on the

short and long term. This will translate to additional demand

for residential units, commercial space, and hotel rooms.

29,000 mi²

Area of proposed

logistics around

canal

Suez Canal

Expansion

97 ships

Daily transits

by 2023

447mn m²

Cairo Airport Core

US$13.5bn

Projected Revenues

by 2023

More than

120,000 job

Creation

5mn m²

Cargo & Logistics

Village

2,8mn m²

Aero City

Commercial

Entertainment

District:

NEW CAPITAL CITY

The New Capital City is expected to be a new administrative

and financial district, extending Cairo eastwards to the Coast

of Red Sea. According to the Egyptian Government and the

master planners, the City will be a new urbanization area

that is projected to host over 7 million residents. The new

city is expected to be surrounded by local schools, religious

buildings, civic amenities and shops.

The project is expected to attract domestic and international

investors. Therefore, a stronger demand for real estate

developments is anticipated in the future.

7 Million

residents

21

Greater Cairo | Real Estate Market Overview | 2015 | Colliers International


Awards Wining Company

58

2012

Voted #1 Advisor MENA

2013

Voted #1 Advisors and Consultants MENA

Voted #1 Project Advisory Team MENA

Voted #1 Healthcare PPP Advisory MENA

2014

Voted #1 Advisors and Consultants MENA

Voted #1 Advisors and Consultants UAE

Voted #1 Advisors and Consultants KSA

Voted #1 Advisors and Consultants Qatar

16 first place awards in total

2014/15

Best Property Consultancy Arabia 2014-2015

2015

Voted #1 Advisors and Consultants MENA

Voted #1 Advisors and Consultants UAE

Voted #1 Advisors and Consultants KSA

Best Consultants – to the Private Sector (Shortlisted)

Education Infrastructure – Best Education Property

Consultants (Shortlisted)

Best Financial Advisor (Shortlisted)

22 Greater Cairo | Real Estate Market Overview | 2015 | Colliers International


Colliers International

Our Services at Glance

SERVICES AT A GLANCE

> Strategic & Business Planning

> Economic Impact Studies

> Market & Competitive Studies

> Market & Financial Feasibility Studies

> Financial Modelling

> Market & Commercial Due Diligence

> Land, Property & Business Valuation

> Mergers & Acquisitions Assistance

> Buy Side Advisory / Sell Side Advisory

> “Sale & Lease Back” Advisory

> Public Private Partnership (PPP) & Privatisation

> Operator Search & Selection and Contract Negotiation

> Site Selection & Land / Property Acquisition

> Asset & Performance Management

> Performance Management & Industry Benchmark Surveys

Countries | Markets

Algeria | Bahrain | Ecuador | Egypt | Iran | Iraq

Jordan | Kenya | KSA | Kurdistan | Kuwait | Morocco

Nigeria | Oman | Pakistan | Qatar | South Africa

Sudan | Tanzania | Togo | Tunisia | Turkey

UAE | Zanzibar

23 Greater Cairo | Real Estate Market Overview | 2015 | Colliers International


502 offices in

67 countries on

6 continents

United States: 151

Canada: 46

Latin America: 26

Asia Pacific: 190

EMEA: 89

$2.3

Billion in

annual revenue

160

Million square metres

under management

16,300

Professionals

and staff

Ian Albert

Regional Director | MENA Region

ian.albert@colliers.com

Stuart Gissing

Regional Director | MENA Region

stuart.gissing@colliers.com

Mansoor Ahmed

Director | Head of Development Solutions | MENA Region

Healthcare | Education | Public Private Partnership (PPP)

mansoor.ahmed@colliers.com

Filippo Sona

Director | Head of Hotels | MENA Region

filippo.sona@colliers.com

Hassan Abou Alam

Senior Manager | Business Development | Egypt

Mobile +20 106 094 4550

hassan.aboualam@colliers.com

Colliers International | MENA Region

Dubai | United Arab Emirates

+971 4 453 7400

About Colliers International

Colliers International is a global leader in commercial real estate services, with over

16,300 professionals operating out of more than 502 offices in 67 countries. Colliers

International delivers a full range of services to real estate users, owners and investors

worldwide, including global corporate solutions, brokerage, property and asset

management, hotel investment sales and consulting, valuation, consulting and appraisal

services and insightful research. The latest annual survey by the LipseyCompany ranked

Colliers International as the second-most recognized commercial real estate firm in the

world. In MENA Colliers International has provided leading advisory services through its

regional offices since 1996. Colliers International currently has four corporate offices in

the region located in Dubai, Abu Dhabi, Riyadh and Jeddah.

www.colliers.com/uae

Disclaimer

The information contained herein has been obtained from sources deemed reliable. While every

reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is

assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to

acting on any of the material contained in this report.

24 Greater Cairo | Real Estate Market Overview | 2015 | Colliers International

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