Egypt is one of only four countries in the world predicted to continue to see a GDP increase of over 3 per cent, based on recent forecasts made by the International Monetary Fund for the full year 2020. The country is also one of the key global markets for real estate investors for a number of reasons.
Firstly, Egypt benefits from being one of the most diversified economies in the Middle East and Northern Africa (MENA) region with a large domestic market and a well-established industrial base. The country is Africa’s prime recipient of foreign direct investment (FDI), which grew by 11 per cent in 2019 to US$9 billion. The Government’s recent reforms have improved macroeconomic stability and boosted investor confidence.
According to Rand Merchant Bank’s 2020 investment attractiveness ranking, Egypt remains at the top of the list for investment in African countries. While two thirds of FDI continues to be allocated to oil and gas, the other third is now made up of real estate, consumer goods, financial services and communications, amongst others.
Next, due to forecast population growth, Egypt’s middle class is expected to grow by approximately 2 per cent per annum reaching 20 per cent of the total population (24.4 million people) by 2030. This growth will boost consumption and demand for affordable high quality education, healthcare services and housing.
20 ‘fourth generation cities’ are currently under construction across the country to house and provide employment for up to 30 million inhabitants. These new cities will be located in the provinces of Assiut, Aswan, Beheira, Beni Suef, Cairo, Daqahliya, Giza, Luxor, Matrouh, Minya, North Sinai, Port Said, Qalyubia and Qena, while the largest city will be the new administrative capital east of Cairo. The plans for these cities include fully integrated services, technology and infrastructure, making them highly desirable for companies as well as inhabitants.
Finally, a strong sub-urbanisation trend over the last decade and significant infrastructure spending has created opportunities for Egypt's commercial real estate sector. Demand for office space will continue to boom backed by the strong economy, especially as retail and office space per capita has so far lagged behind other similar cities in the MENA region.
An example of this is Arkan, west Cairo’s flagship commercial and retail destination, begun in 2011, which will open many new phases starting this winter. Once the extension is completed, the development will span a total built-up area of 260,000 sq m including 210 shops, 67 restaurants, an 185-room hotel, a 600-seat theatre, 47,000 sq m of offices and 4,500 parking spaces, quadrupling its current offering.
Given the country’s fundamentals and the Government’s ongoing reforms and these real estate projects, Egypt is expected to continue to be attractive to international investors and we anticipate activity to rise in the coming years.
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