Real estate in Egypt is one of the most important economic sectors, and it significantly affects the movement of the national economy. In recent years, the sector has witnessed accelerated changes as a result of a range of economic and social factors, and future expectations revolved around the continued growth and development in this field. However, the real estate market still faces many challenges that affect its stability and growth. In this article, we will discuss the challenges faced by the real estate market in Egypt in 2024, as well as the future prospects of this market.
1. Economic challenges
The current economic situation is one of the most important factors affecting the Egyptian real estate market. In recent years, the Egyptian economy has witnessed many fluctuations caused by inflation, rising prices, and increasing production costs. These economic challenges directly affect the cost of building materials and labor, raising the cost of developing real estate projects.
Inflation is one of the main factors affecting the purchasing power of citizens, which makes it more difficult to obtain affordable housing units. Economic reports have confirmed that inflation in Egypt has clearly affected the real estate market, as the prices of land and residential units have witnessed a noticeable increase, which made many popular groups face difficulty in owning a property.
The high interest rate on mortgages is also a big challenge. High interest rates reduce the ability of individuals to finance the purchase of residential units, which reduces the volume of demand for residential real estate, especially in areas with high prices.
2. Rising real estate prices
Rising real estate prices in Egypt are a constant challenge, especially in light of the shortage of land in vital areas, and high construction costs. This challenge is one of the biggest problems facing real estate developers and investors in 2024. With an increase in prices, competition for premium land in megacities increases, and developers have difficulty acquiring affordable land for the implementation of their projects.
Real estate prices continue to increase in major cities such as Cairo and Alexandria, which leads to a decline in the purchasing power of the middle classes. Despite this, some other areas with new real estate projects such as the new administrative capital and new El Alamein continue to receive great attention from investors, who are betting on the future of these cities in attracting residents.
3. Challenges in land availability
The land crisis is one of the biggest challenges facing the Egyptian real estate market, especially in major cities and attractive areas. The amount of land available for development is limited, and competition for land in privileged areas continuously increases prices. The demand for land is constantly growing, and the government should take this issue into account by constantly offering new land to meet the needs of the market.
In light of these challenges, major real estate projects in new cities such as the new administrative capital and new El Alamein have become more attractive to investors, who seek to take advantage of the opportunities available in these promising areas. However, rising land prices in these cities are also another challenge for developers.
4. Real estate financing challenges
Real estate financing is one of the main factors affecting the real estate sector in Egypt. Despite the efforts made by the government and banks to provide financing to citizens, high interest rates on mortgages are one of the biggest obstacles facing individuals wishing to purchase a property.
High interest rates increase the cost of loans, which makes obtaining financing an obstacle for many citizens, especially from the middle and poor categories. Banks continue to impose strict conditions on real estate loans, which leads to a small number of loans granted to individuals, and therefore the demand for real estate decreases.
5. Challenges of the rental market
The rental market is also experiencing many challenges in 2024. Rental prices have increased significantly, which has made it difficult to find suitable housing commensurate with the income of individuals. This increase in rental prices continues in some areas that are experiencing high demand, such as New Cairo and the Fifth Settlement. We have noticed that some of the less developed neighborhoods are starting to see a decline in demand, which leads to fluctuations in rental prices.
As inflation and prices continue to rise, rental prices are expected to continue to increase over the next year, which will affect many tenants, especially from the middle-income strata.
6. Future forecasts of the real estate market in 2024
Despite the many challenges faced by the real estate market in Egypt, there are several indicators that call for optimism. In 2024, the real estate sector in Egypt is expected to continue to expand, especially in new cities such as the new administrative capital and new El Alamein, which are witnessing a high demand from investors.
The sector is also expected to witness more innovation in construction and the use of technology to reduce production costs, such as the use of alternative building materials and turnkey construction technology. The Egyptian government will also continue to provide facilities to real estate developers to encourage them to invest in the sector, which will lead to an increase in the supply of residential units.
Future projects are expected to focus on developing areas that provide integrated infrastructure such as schools, hospitals, and public utilities to meet the needs of citizens. The government will also work to promote foreign investment in the real estate sector, which will stimulate the market and create more investment opportunities.
7. Abstract
Despite the challenges facing the real estate market in Egypt in 2024, this market still has many opportunities and expected growth in the future. Despite inflation and rising prices, the projects of the new administrative capital and new El Alamein remain the focus of attention of investors and buyers alike. Innovation in construction technologies and real estate development will also continue to play a major role in improving market efficiency and reducing costs.
If investors are able to deal with current challenges and find innovative solutions, the real estate market in Egypt will remain one of the promising markets that will bring significant investment returns in the future.
