Demand for residential units are expected to increase by approximately 115,000 units every year, according to regional director at Colliers International Middle East and North Africa Ian Albert, who further explains that saturation of the real estate market is unlikely due to an undersupply of units.
Colliers International is a global commercial real estate company, which earlier this year announced that it had opened up a new corporate office in Cairo.
In an interview with Daily News Egypt,Ian Albert said that the most promising areas for development in Egypt are in Ain Sokhna and the North Coast, where there is a demand for high quality residential projects.
“The supply of residential real estate across all sectors is still behind demand when you look at the demographic landscape of Egypt. Considering population growth, Greater Cairo is expected to be undersupplied by approximately 400,000 units by 2020,” says Albert adding, “The majority of the undersupply is expected within the middle-income market (those earning between $10,000 and $25,000 per annum). While there is capacity in offices, industrial, hospitality, and retail complexes, these sectors require a greater level of understanding as the landscape changes for these facilities and greater care is needed when looking at investment.”
According to Albert, demand for residential units in Cairo is expected to increase by approximately 115,000 units every year, with supply expected to increase by 40,000 to 50,000 units per annum. “In an already undersupplied market, it is unlikely the residential market in particular will face saturation in the short to medium-term,” he says.
Mortgage finance remains so insignificantly small at the moment, it does not have any real impact on the market, especially where it is needed the most—for example, for middle income and millennial segments. There are some key impediments that need addressing. These include the lack of long-term funding sources for 20-30 years. This in turn allows mortgage lenders to offer the same terms to borrowers. This is a critical point as the most important point is the affordability of the monthly payments and these are often dictated by the length of the loan period rather than the interest rate. The current laws and the Central Bank of Egypt’s (CBE) guidelines restrict banks from lending against undelivered and constructed units, and this creates issues in the retail lending and the developer financing stages.
Daily News Egypt
20 September
