The true impact of Egypt's political crisis on the property market remains unclear, according to Jones Lang LaSalle 's latest Cairo Real Estate Market Overview. The Global Property Guide reported that while the sector remained robust in the first half of 2013, its future remains uncertain as instability in the country continues. Local experts claim the Egyptian real estate market has been hit hard by civil unrest over the last six months but until results for Q3 emerge, it will be hard to gauge the extent of the damage.
Nevertheless, the performance of Cairo property in Q2 gives room for hope that the market will be able to withstand the shocks. Between March and June the average asking price for residential property increased by eight per cent quarter-on-quarter in Greater Cairo. In New Cairo, sales values of apartments rose by 11 per cent over the month to $1,125 (£694.66) per square metre. Villa prices also increased by three per cent to $1,741 per square metre.
Conversely, in 6th of October City average apartment values dropped by three per cent to $897 per square metre in Q2. Yet the asking price for villas increased ten per cent quarter-on-quarter to $1,111 per square meter.
The situation may worsen, however, upon the release of Q3 figures and Jones Lang LaSalle noted that weakening economic fundamentals in the country could have an impact. Foreign reserves have remained stable over the last six months, but the Egyptian pound is depreciating, while inflationary pressures increase, foreign debts mount, and petrol and electricity shortages take hold. There have also been delays to the $4.8 billion loan that Egypt has requested from the International Monetary Fund, which has added another degree of uncertainty.
Stakeholders are understandably holding off investing in Egyptian property until the results of key decisions are in and greater clarity is afforded to the market. However, during Q2 important patterns began to emerge. In the short term, some investors were making tactical decisions and relocating from central Cairo to a more secure suburban location. At the same time, long-term strategic decisions were also being made as buyers and developers recognised that now is the time to begin or continue with projects that will capture the potential growth and value in the market once stability returns.
Article by +Danny Bance on behalf of Propertyshowrooms.com