U.S. real estate consultancy JLL said on Tuesday it is cautious about the timely handover of residential projects in Egypt due to the coronavirus.
According to JLL’s Q1 Cairo Real Estate Market Performance report, 135 residential units were delivered in Cairo during the first quarter of 2020. Around 58,000 units are expected to be completed over the remaining 9 months of the year, the report read.
“However, given the current market conditions and potential slowdown in demand, on the back of negative sentiment and contraction of household incomes, we remain cautious of the timely delivery of projects, and can expect these to spill over into 2021/2022,” JLL said.
Despite the unfavourable market conditions, JLL said Cairo’s office sector has seen a 9 percent increase in average prime rents during the first quarter, due to the limited supply of high-quality offices.
Average vacancy rates remained stable over the quarter, at 12 percent, it added.
“However, given the current market uncertainties, demand for office spaces is likely to remain subdued in the short-to-mid-term, with requirements focused on smaller fitted out spaces, to minimize capital expenditures,” JLL said.
Yet, the consultancy said the e-commerce sector might soon become a major part in the Cairo market after showing great growth potential following the spread of the coronavirus.
“E-commerce is a popular investment sector with growing interest globally,” Ayman Sami, Country Head, JLL for Egypt, said.
“It will need strong government support, comprising a key element of plans for the city’s continued economic growth. This will also reflect positively on the active warehousing and logistics sector in Egypt with great potential to grow,”
By the end of April, Egypt started easing some of the restrictions to curb the spread of the coronavirus and shortened the night-time curfew.
This month, hotels have been allowed to reopen for local tourists, on condition that they operate at a maximum capacity of 25 percent until the end of May.
JLL sees e-commerce to boom in Egypt amid coronavirus
According to the report, e-commerce is now striving to keep up with the exceptional increase in demand for online shopping.
JLL said that retail market in Cairo has had a positive performance in the first quarter, but current market conditions are expected to result in increased downward pressure on retail operations and sales volumes.
Average rental rates in primary and secondary malls in Cairo rose 10 percent year-on-year in the first quarter, the report read.