Egypt's residential sector leads 2024 project awards, valued at $2.4bn: JLL
After facing a challenging beginning to 2024, Egypt is projected to see its GDP growth accelerate to 4% in 2025. This is expected to be driven by easing inflation, improved currency stability, and ongoing public sector reforms, according to JLL's Middle East and Africa (MEA) Market Review and Outlook for 2025.
Supporting this positive outlook are predictions for inflation to slow from 28.3% in 2024 to 17.8%, alongside a surge in foreign direct investment (FDI), particularly from GCC countries. This influx of capital and global confidence is expected to significantly boost Egypt's real estate sector, highlighting optimism about the country's economic potential and property market, JLL reports.
Ayman Sami, Country Head of JLL Egypt, commented: 'Despite the economic turbulence and policy tightening, Egypt's real estate market is on an upward trajectory. The reduction in inflationary pressures, coupled with rising foreign investment and improved stability of the Egyptian pound, is reigniting investor interest. In 2025, Cairo's residential and hospitality segments are expected to be the main drivers of growth, supported by government efforts to enhance the investment environment.'
Despite a range of challenges, including rising costs, escalating wages, and geopolitical conflicts affecting logistics and supply chains, the construction market in the MEA region slowed in 2024, experiencing a 20.2% decline to $90bn. In Egypt, the residential sector, valued at $2.4bn, dominated project awards, according to JLL. Even with pressures such as labor shortages, technology issues, and regulatory complexities, the MEA construction market remains robust, with a $1.9trn project pipeline.
Ahmed Hemmat, Head of Projects and Development Services for JLL in Egypt, stated: 'Egypt's construction market has shown remarkable resilience amid global challenges. While geopolitical tensions and economic uncertainties have impacted the sector, national projects and growing foreign investments are creating significant opportunities for developers. Strategic partnerships and innovative solutions will be essential to overcoming challenges such as rising material costs and supply chain disruptions.'
As the economic landscape improves, Cairo's residential sector continued to demonstrate resilience throughout 2024, with rental rates outperforming the broader market. The 6th of October City and New Cairo both saw substantial rental increases of approximately 108% year-on-year, while secondary markets experienced price hikes of 112% and 116%, respectively, largely driven by inflation. Healthy demand is expected to continue pushing rental and sales prices upward in 2025, though at a slower pace than in 2024.
In 2024, Cairo saw the completion of approximately 24,000 new residential units, bringing the total inventory to around 293,000. In 2025, the sector is expected to expand further with the delivery of nearly 32,000 additional units.
Cairo's hospitality sector also saw significant growth in 2024, as government initiatives improved the tourism landscape, attracting a record 15.7 million visitors to the capital. The hospitality sector benefited from an increase in supply activity, with key hotel operators like Hilton, Accor, and IHG announcing expansion plans. Though only one new hotel was completed in 2024, nearly 2,000 additional hotel rooms are expected to be added to the market in the coming year.
While Cairo's hotel occupancy rates dipped by 5.4 percentage points in 2024, the average daily rate (ADR) saw a slight uptick of 0.52%. The hospitality sector's growth is set to continue, with additional supply supporting the goal of attracting 18 million visitors in 2025.
Cairo's office market remained stable in 2024, with a slight reduction in vacancy rates and a modest drop of 1.8% in average rents. In 2025, nearly five times as many office units are scheduled for completion. The demand for Grade A office spaces, particularly in business parks and mixed-use developments offering amenities like ample parking, is driving up prices due to limited supply in relation to demand. This demand, especially from corporate occupiers, is expected to fuel further growth in the office sector over the medium to long term, while the growth of the outsourcing market will also stimulate increased activity in this space.
After a period of downturn, Cairo's retail sector began to show signs of recovery toward the end of 2024. Average rental rates in Q4 remained stable compared to the previous quarter, with the secondary market leading the charge, showing an annual increase of 14%. Primary regional and super-regional malls also saw moderate growth, with rental rates rising by 6%.
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