Should you sell property Egypt online in 2016? What does 2016 hold in prospect for the property market in Egypt? For one, Egypt is a densely populated country of 85 million people with over 55% of its population below the age of 35.
There are 800,000 marriages in Egypt every year. This means there will always be a demand for residential properties in Egypt, no matter how terrible the political situation or the economy gets.
In fact, every year, Egypt requires half a million new homes to meet the requirements of a fast rising population. The demand for new housing infrastructure in Egypt is simply phenomenal.
For long, the real estate sector was hit by political turbulence. But the election of President Abdel Fattah el-Sisi in 2014 has done a lot to stabilize the situation somewhat. The real estate market needs political stability to grow and we are finally getting to see that in Egypt.
True, there are issues with growing Islamic extremism and the rise of the ISIS or the Islamic State in the neighbourhood. There has been a spate of terrorist attacks such as the downing of a Russian jet at Sharm el-Sheikh last year which killed over 200 tourists. However, the general political situation in Egypt is much better than it was 4 or 5 years ago, which was a time of great uncertainty.
Foreign investors who are interested in buying properties in Egypt will be encouraged by the new Law 17/2015, which removes all restrictions on foreign ownership of property in Egypt. Many of the strict regulations and bureaucratic red tape that restricted foreign investment have been removed, which is such a huge relief.
Habiba Hegab, a real estate analyst at the Cairo based investment bank Beltone Financial, has reported a major surge in demand for real estate in Egypt since 2011. She says, “This has been mainly driven by inflation concerns, the depreciation of the currency, stock market volatility and restrictions on foreign currency transactions.”
However, the housing crisis is Egypt is far from over. Egypt’s property market is pretty much unregulated, which means a vast majority of Egyptians cannot afford to buy a proper accommodation in Cairo and other Egyptian cities. The extremely high inflation has led to the growth of informal settlements, with poor infrastructure and quality of living.
Rich Egyptians buy properties purely for investment purposes and to safeguard their savings. Many purchase properties even though they have no intention of using them, instead of putting money into banks or investing in the stock market.
Indeed, the situation is such that at least 40% of the apartments in upper class areas in the country remain unoccupied as they are far too expensive for most Egyptians. This is a serious issue in Egypt and is slowly building resentment and social unrest.
There is today a huge gap between income and residential property prices in Egypt. In fact the home price to income ratio in Cairo is 11 to 1, which is one of the highest in the Middle East. Caro is one of the least affordable cities in the world, even more so than New York, London and Los Angeles.
What is also worth noting is that rental rates are bottoming out in most parts of Cairo. The rental market is at its lowest point for years and it should start accelerating soon. When it does, it should push the prices of properties in Cairo and elsewhere in Egypt even further.
The rise in rental demand was 10% higher in 2015 than in 2014 and the growth is expected to continue in 2016 as well. In Cairo, the average rent per sq. metre ranges from $7 to $9 per month. It was $6 to $8 per sq. metre at this time, last year.