Cairo

Source: Al-Wafd newspaper

Dr. Ali Mohamed Al-Khouri

The real estate sector in Egypt has witnessed remarkable growth in recent years, achieving significant gains and widespread expansion. The establishment of new cities and major urban projects across the country are the main factors that have stimulated this growth. This urban expansion forms part of Egypt’s ambitious vision for sustainable development and achieving economic prosperity.

Population growth is considered one of the main factors driving the growth of the real estate sector in Egypt. According to United Nations data in July 2024, Egypt’s population exceeds 114.5 million people, with an annual growth rate of approximately 1.63%. This continuous population increase imposes an urgent need to expand infrastructure and provide sufficient housing to meet the growing demand.

Major urban projects such as the New Administrative Capital and New El Alamein City reflect Egypt’s ambition to achieve comprehensive urban transformation. These projects provide modern living standards and create millions of jobs, and the New Administrative Capital alone is expected to accommodate more than 6.5 million people. Major real estate projects also drive the development of infrastructure, including roads, public facilities and services, improve the quality of life for residents and support economic growth, and even represent important economic hubs aimed at relieving the current pressure on traditional cities such as Cairo.

In addition, the policies of the Central Bank of Egypt, which are moving towards lowering interest rates, have made investment in the real estate sector more attractive. Reducing borrowing costs enhances the dynamism of the real estate market and allows more individuals and companies to invest in this sector.

Among the many advantages of real estate investment in Egypt is the potential to achieve high returns, especially in the long term. Historical data indicates that property values ​​in major urban areas have risen significantly over the past decade. Real estate is also a traditional asset to hedge against inflation, as its value tends to rise over time, and real estate investment even provides a stable and rising means of value, in light of the inflation rate in Egypt, which reached about 7.5% in 2023.

But despite the many advantages, real estate investment in Egypt faces multiple risks. The most prominent of these risks is the decline in citizens’ purchasing power as a result of inflation and the high cost of real estate, which makes many Egyptians find it difficult to afford housing costs. The fluctuation of inflation rates, which have reached more than 15% in recent years, increases these difficulties, and real estate prices are subject to market fluctuations, which in turn leads to potential losses for investors.

Economic downturns or changes in policies can also affect market stability, causing prices to fall. The difficulty of liquidating real estate investments quickly, especially in light of market stagnation, is a major risk for investors who need quick access to capital.

As real estate prices increase, housing costs rise, which puts a burden on Egyptian family budgets. This trend calls for national policies that make housing more affordable for the average citizen. In addition, rapid urban growth leads to traffic congestion and increased levels of environmental pollution. As more people move to urban centres, pressures on transport networks and the environment increase. To meet the pace of urban growth, it is necessary to accelerate infrastructure development, and ensure that new projects are supported by adequate public services and facilities to improve the quality of life and support sustainable growth.

In general, government policies should work to further regulate the real estate market to ensure that all citizens have access to suitable housing at affordable prices, especially for citizens with limited income. These policies should aim to stabilize prices and make social housing projects accessible to different groups. Such initiatives can reduce the housing burden on low-income families.

In light of global economic challenges and rapid market changes, policy makers must adopt a future vision based on an innovation mindset to find solutions and develop data-driven policies to achieve a balance between supply and demand. Technological innovation must be a strategic focus to improve the efficiency and sustainability of the real estate sector and invest more in smart building technologies and renewable energy to ensure a more sustainable future. Work should also be done to develop legal and regulatory frameworks that support sustainable growth and transparency in the real estate market, as they are motivating foundations for real estate developers to participate in development projects, raise the level of confidence in the market and attract more foreign investments.