Egypt

Heightened demand for Grade A, ESG- compliant offices

Cairo’s office market is undergoing a dynamic evolution, with businesses responding to the emergence of hybrid working patterns, and a growing emphasis on sustainability.

Another key trend is the increasing demand for both small as well as flexible offices measuring 100-150 sqm. This surge is being driven by a growing community of local start-ups, freelancers, and SMEs seeking collaborative and cost-effective work environments.

Co-working space has emerged as a popular choice for this group of businesses, not least because of the flexible lease arrangements and near-instant availability of ‘plug-and-play’ space. Recent new coworking market entrants in Cairo include CO-55 and MQR Spaces.

Elsewhere, occupiers have shown an increased appetite for the best-in-class offices that also meet their ESG obligations. Developers are embracing eco-friendly practices and incorporating energy-efficient designs into their office developments which not only helps to satisfy occupiers’ ESG considerations, but also delivers a cost-efficient solution to the challenge of rising utilities costs.

The rising demand for grade A offices has put upward pressure on prime rents, which have risen by 7% over the last 12 months and currently stand at c. US$ 35 psm per month.

Booming e-commerce sector

The retail sector is witnessing transformative trends that reflect Cairo’s evolving consumer landscape and expenditure trends. One notable shift is the increasing prominence of e-commerce. The market entry of Amazon and Noon have helped to further entrench this shift.

Local and regional retailers are responding by investing in robust e-commerce infrastructure and delivery services. This trend has reshaped the traditional brick-and-mortar retail model, prompting businesses to create seamless omnichannel experiences to meet the diverse preferences of consumers.

Government policies boosting industrial growth

The growth of e-commerce is driving demand for efficient storage and distribution facilities, which is catalysing the development of modern industrial zones equipped with state-of-the-art logistics infrastructure. Automated warehousing systems and optimised supply chain management are becoming integral components of these developments. Despite the surge in demand, monthly prime warehousing rents have held steady at US$ 3 psm for the last nine months.

Residential

The desire for convenience and worldwide growth of the live-work-play model for urban living, where residents can access amenities, workspaces, and leisure options within walking distance is driving up demand for mixed-use and/or community living among residential tenants.

In the sales market, affordability remains a top priority for buyers. Developers are wary of this and are increasingly offering innovative financing options, which are supplementing the government's own initiatives, such as the Housing for All scheme, which offers long term subsidised mortgage loans.

Despite the increased focus on homes that are more affordable, demand for residential units is also being fuelled by the Egyptian pound’s devaluation. The pound has lost almost 10% of its value against the US dollar over the last two years. This is driving some households to purchase residential real estate as a way to preserve the value of their savings.