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Mazaya Monthly Real Estate Report -
Week 5 - October 2016
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The report added that it has now
become necessary to launch a package
of economic reforms in parallel with
the floating exchange rate mechanism.
These reforms, according to the
report, should include guarantees to
provide foreign currency for purposes
of importation for a minimum of six
months. The report highlighted the
grave impact the current economic
developments would have on the
realty market, which has for 10
years been witnessing increasing
prices and high demand due to the
continued devaluation of the local
currency by the Egyptian Central Bank.
The report predicted that the crisis will
continue and the average Egyptian
citizen’s purchasing power will be
curbed if no sufficient measures
are taken. A continued rise in real
estate prices will probably make
the recession manifest itself due to
the locals’ unwillingness to buy at
overstated prices. Mortgages would
go for longer payment periods to
ensure lower monthly instalments.
The report concluded that it has
become more necessary now than
ever before to survive the crisis by
launching medium and small-scale
housing units. Furthermore, the
government can also enhance its
efficiency to overcome challenges in a
market that already boasts multiple
investment opportunities for Egyptian
businessmen, due to the restrictions
imposed on foreign currency and
external money transfer transactions.
The current crisis is considerably
attributed as well to the deteriorating
conditions in the tourism sector, which is
one of the largest hard currency earners
in the country. The ailing economic
conditions have not been mitigated by
the floating exchange rate regime, which
has proved to be an insufficient solution
to survive the current crisis, despite
previous predictions that exchange
rate flexibility would draw foreign
investments and re-channel expats’
remittances back to the local economy.
The report highlighted the effect
of increasing inflation rates on the
current property prices, with available
data attributing the all-time high 20%
increase in prices over the past year
to the 70% hike in land prices in Grater
Cairo. The average price per square
meter for houses and villas reached
around LE 18,000, with property prices
varying according to location, space
and level of finishing and decoration.