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New Market Study Published: Egypt Real Estate Report Q4 2012

New Business research report from Business Monitor International is now available from Fast Market Research

 

Boston, MA -- (SBWIRE) -- 11/12/2012 -- The Egypt Real Estate report examines the Commercial Office, Retail, Industrial and Construction segments in the context of a market, which in spite of its long-term potential, continues to be susceptible to instability and which will be characterized by the aftershocks of the Arab Spring in the short-to medium term.

With a focus on the principal areas of Cairo, New Cairo, 6th of October City and Giza, the report covers the rental market performance in terms of rates and yields over the past 18 months. The report also examines how best to maximize returns in the commercial real estate market, while minimizing investment risk and exploring the effect of a stalled pipeline on a market, which until the events of early 2011 held so much potential. The key risks and opportunities driven by domestic and regional investor activism, combined with the future potential of the domestic consumer market, are also explored; with macroeconomic fundamentals and political developments underpinning short-term industry sentiment and performance.

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We see little prospect for a swift economic recovery in Egypt in 2012. Although we remain bullish in the long term, our newly gathered H112 data continues to reveal the tangible effects of Egypt's uneasy political transition on the commercial real estate market, with retail space suffering particularly from the country's volatility. We expect rents to stabilize over the coming quarters, but the return to pre-Arab Spring rental rates will be a gradual process.

Key Points:

- With the political backdrop likely to remain volatile over the coming quarters, growth momentum will fail to gather much steam. Real GDP is forecast to expand 2.1% in 2012, which is up only marginally on the 1.8% rate of growth posted in 2011.

- Egypt's presidential election on June 16-17 has been overshadowed by what can only be described as a military coup that threatens to plunge the country into its worst crisis since the initials days of January 2011's revolution. Despite tentative indications showing the Muslim Brotherhood's Mohamed Mursi winning the vote, executive power will now most likely rest with the Supreme Council of the Armed Forces (SCAF) until new parliamentary elections later this year. As a significant degree of political volatility has already been priced into our forecasts, we maintain our core macro and market views.

- We have become decidedly more bearish on the outlook for the Egyptian pound. With reserves rapidly declining, we expect a devaluation to EGP7.0000/US$ in the first instance.

- Our interest rate forecasts have been revised. We are projecting the benchmark lending rate to be raised to 11.00% by end-2012, from 10.25% currently.

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