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Egypt looks ahead

Posted in Middle East Business by thomthumb84 on February 9, 2010
Real Estate = Big Money

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Jones Lang LaSalle, one of the main international players in the real estate and hospitality services industry across the Middle East and North Africa, has given a major vote of confidence to Cairo’s growing role as the main strategic gateway to markets in the Middle East and North Africa for international and regional investors by announcing that it will be opening a full service real estate investment advisory operation in the Egyptian capital early in 2010.

The company, with global revenues of nearly $3 billion and clients in 60 countries serviced from 750 locations worldwide, including 180 corporate offices said:  “Cairo is becoming a pre-eminent regional real estate market for local, regional and international investors and occupiers, with renewed focus on diversification, and affordable housing over the next five years.” said Thierry Loué, CEO of Jones Lang LaSalle MENA.

Along with Dubai, Cairo features as the MENA region’s favourite destination for major global corporates. The large number of Fortune 500 companies present in the city serves as a key indicator of both the recent liberalisation of the economy and the potential of the increasingly affluent local population.

“In recent years, working with our global occupier clients, those Fortune 500 companies active in Cairo, we have gained a unique insight into the importance global organisations place in having a strong presence in Cairo to service their regional markets, especially those in the emerging African continent” said Loué.

The company’s warm praise for the bustling city of some 18 million people is contained in a new report entitled: “Cairo: Open for Global Business.”

Among its bull points are the presentation of Cairo as demonstrating growth in its residential sector with an important shift towards affordable housing. Cairo is described as a demand-driven market where at present, affordable housing is in short supply.

 “The key markets in Cairo are driven by ‘end user’ demand rather than speculative development. As the Cairo market is largely cash driven, it has experienced much lower levels of debt that in many other cities in the region. It is therefore more stable with greater prospects for sustained growth than many of its peer cities,” said Loué.

Residential demand has continued to blossom in Cairo due to plans initiated in the 1970s to build various new satellite cities. These satellite cities are gaining increasing popularity as residential communities. Demand has been particularly high in the 6th of October City and New Cairo.

“The city is growing rapidly from its constrained historic core to a range of new self-sustaining cities on the urban periphery. Cairo is a global city with a tremendous future – that is why we are opening our office here in early 2010.” said the report.

It also said: “While the uncertainty in the global economy has impacted sentiment in Egypt as elsewhere, the underlying fundamentals of the Cairo residential market remain strong.

“Demand for residential real estate in the city will continue to grow, albeit at a steadier rate compared to the last few years, greatly assisted by the expanding mortgage market.”

Previously the majority of the projects taking place in these new urban cities have targeted the high end segment, resulting in over-supply of luxury residential units. The tendency is slowly shifting to a more unbalanced position as a number of developers have now initiated housing projects targeting the massive income market.

Cairo’s fragmented office market is described as providing significant opportunities for purpose-built international quality office buildings with demand growing from international occupiers. Tourism also presents another large growth opportunity in the Cairo real estate market. Driven by significant levels of new investment in the hospitality sector, 2010 is expected to record an increase in both international and regional visitors. The report states that Egypt experienced the second highest number of tourist arrivals in the MENA region in 2008, second only to Saudi Arabia.

Cairo is the gateway to approximately 20 percent of total arrivals in Egypt. There is a particular emphasis upon a rise in regional tourism in the past two years. Regional tourists tend to stay in the country 20 percent longer than Europeans and they also spend more entertainment than visitors from other regions.

Loué concludes in his explanation of the company’s forthcoming expansion in Egypt: “Cairo remains a market with more demand than supply for new, high quality retail investment development and is significantly under-served as compared with competing markets for modern, professional managed retail offerings.”

Published in Febuary issue of The Arab Business Review (A publicaion for AAIB)

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