Following a positive start to 2019, all sectors of Cairo’s real estate market remained strong and demonstrated healthy demand levels throughout the first half of the year, indicates JLL’s Q2 Cairo Real Estate Market Overview report. The retail sector, in particular, was the best performing segment of the market.
“Cairo’s real estate market overall continues to benefit from the various new development projects that are underway and in the pipeline. As the government takes several measures to boost the economy, we anticipate these projects to enhance confidence and continue driving investment in the coming months,” said Ayman Sami, country head, Egypt, JLL.
The retail supply in Cairo witnessed one new addition in Q2, with the completion of The Yard (15,000 sqm of GLA) in Rehab City. Approximately 216,000 sqm of retail space is expected to enter the market in 2019, including the Open-Air Mall of Madinaty, which is already partially open, and Almaza City Centre.
Most of the future supply is in New Cairo, with very few announcements in West Cairo. At a time when Sheikh Zayed City’s current retail centres are witnessing expansions, especially on the 26th of July Corridor, New Cairo will still remain a prime location for retail. As such, more developments are expected to shift towards the East as confidence in the New Administrative Capital’s success grows sturdier. That convergence in the East has, in turn, provided stimulus and competition for retailers and developers and has been complemented by appreciating retail performance and increased consumer appetite in Cairo.
The retail market in Cairo saw rents increase significantly by 7%, compared to Q2 2018, with augmented interest in newer retail centres and strips in prime locations, especially in East Cairo. New market entrants offering luxurious and innovative space in unserved locations are expected to boost further demand in the sector.
Meanwhile, retail vacancy rates increased on an annual basis to 15% but remained stable when compared to Q1 2018. Looking ahead, vacancy rates are expected to increase with the delivery of new supply over the remainder of the year. This new stock will be matched with higher rental rates because those new market entrants will offer more luxurious, innovative and superior quality space in underserved locations and will be quasi monopolistic in those areas. The focus among both existing and new malls remains on enhancing the retail experience, with developers continuing to innovate by offering interactive concepts, such as pop-up events and activities.
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