The Egyptian commercial property market is experiencing something of a mass exodus in the wake of the country's political unrest, causing investors to turn to residential real estate in a bid to stay afloat. Reuters reported that as instability and military curfews affect business activity and customer habits, developers and funds are quickly redesigning existing projects and turning them into homes to preserve their wealth.
Peter Welborn, Knight Frank's managing director of Africa, told the news provider that residential will be the "bread and butter" of the company for a little while. However, this won't be enough to attract foreign buyers back into Egypt. "The Arab Spring was supposed to bring a higher level of interface between the man in the street and the politicians but has effectively chased away overseas investors," he explained to Reuters.
SODIC, one of Egypt's biggest developers and the company behind the Eastown scheme in New Cairo, has also had to think on its feet, turning office and retail space into alternative properties. Ahmed Badrawi, managing director of SODIC, explained to Reuters that "the demand for class A office space has almost disappeared overnight". Vacancy rates for traditional commercial property are set to rise, while many international investors are expected to direct funds to the sub-Sahara region. Rents for the best Cairo offices have fallen to $40 (£24.67) per square metre per month from $50 since 2009, data from Knight Frank has shown.
However,the Egyptian real estate market is refusing to go down without a fight and SODIC posted strong growth for the second quarter of 2013, Zawya reported. Indeed, its Q2 net revenues saw a 152 per cent quarter-on-quarter growth figure of EGP 327 million (£297 million approximately). The government is also trying to stabilise the economy, which, alongside declining interest rates, capital controls, the absence of other alternative investments and inflationary pressure could help real estate tick over during the current turbulence, Pharos Research explained to the news provider.
Article by +Danny Bance on behalf of Propertyshowrooms.com