A plethora of investments ranging from the expansion of the Suez Canal to the construction of a new city might not be the solution to the problems Cairo faces wondered a certain Eleonora Vio a year ago, in her articled query titled: Can Sissi turn around Egypt’s economy with mega projects?
Apart from its hopes for a democratic future, could this article of Trade Arabia be an answer?
Megaprojects ‘driving Cairo office space demand’
The real estate market in Egypt’s capital Cairo continues its rapid growth with the construction of large-scale projects stimulating economic expansion and driving demand for Grade A office projects, according to Savills, a leading real estate services provider in the Middle East.
There is a systematic shift of tenants towards newer developments away from the erstwhile central business hubs in Central Cairo, towards modern speculative and purpose-built developments across New Cairo in the East and Sheikh Zayed City in the West, stated Savills in its latest report that analyses the Cairo Metropolitan Area (CMA) office market for the first half.
Demand is also driven by new market entrants – both domestic and global – along with expansion and consolidation exercise, it stated.
The city’s strong demographic vantage in terms of young, educated and comparatively low-cost workforce and a further improvement in global investor confidence towards the economy in the medium-to-long term will continue to drive demand for office real estate in the city, it added.
Head of Egypt Catesby Langer-Paget said: “As Egypt’s macro-economic situation continues to improve on account of prudent policy measures, our recent research shows that the demand for office space in Cairo has increased, driven by a mix of relocation, expansion and expansion led consolidation exercise.”
The sustained demand for office space has led to a spurt in project launches and completions over the past few quarters. This increase in the availability of Grade A options has created a short-to-medium term pressure on rental values across most markets.
However, headline rental values continue to remain stable but we have noticed enhanced flexibility among landlords with regards to incentives and lease terms. During H1 2019, rents for Grade A stock across Heliopolis ranged between E£300 – E£350 / sqm / month while in New Cairo and Sheikh Zayed City it ranged between E£350 – 400 / sqm / month.
“We noticed strong interest from the pharmaceutical sector, technology, banking and financial services and media firms to occupy Grade A space within the city,” stated Langer-Paget.
“In terms of new supply, no new projects were completed during the current review period. However, to meet this growing demand, we anticipate approximatively 155,500 sqm of Grade A space to be handed over across key areas such as New Cairo and Nasr City over the next six months,” he added.