The real estate market in Egypt is one of the main engines of the national economy, thanks to the growing demand for real estate, whether in the residential, commercial or administrative sector. This market has undergone significant changes over recent years, due to several economic, social and political factors that directly affect it. In this article, we will discuss the most important factors affecting the Egyptian real estate market in general, and how these factors affect prices, supply, and demand.
1. Economic factors
Economic factors are one of the most influential factors in the real estate market in Egypt. Of these factors:
Inflation
Inflation is an important economic factor that directly affects the real estate market. In case of high inflation, prices increase in all sectors, including the real estate sector. When construction costs rise (such as building material prices), real estate developers are forced to raise property prices in order to cover these increased costs. Inflation also raises the cost of mortgage loans, which leads to a decrease in the ability of individuals to purchase new real estate.
Interest rates
Interest rates on mortgages significantly affect the real estate market. In the event of higher interest rates, mortgage financing becomes more expensive, which may lead to a decrease in the demand for buying real estate. On the contrary, if interest rates fall, this can lead to an increase in demand for real estate, as individuals and investors are encouraged to finance more easily.
Individual income
Per capita income in Egypt also affects the purchasing power of individuals. With the growing gap between income and prices, buying real estate becomes difficult for many Egyptians, especially in major cities such as Cairo and Alexandria. Therefore, increasing income and providing concessional financing are part of the solutions to encourage citizens to enter the real estate market.
2. Supply and demand
The balance of supply and demand is one of the main factors determining real estate prices on the market. The Egyptian real estate market is witnessing a noticeable increase in demand, due to several reasons such as an increase in the population, increasing urbanization in major cities, in addition to major development projects in many areas.
Population increase
Egypt is witnessing a continuous population increase, which makes the demand for real estate increasing continuously. This growing demand makes the real estate market in need of providing more housing units periodically.
Urban transformation
The urban transformation is also an important factor in the real estate market, as the state has begun to implement major projects aimed at developing new cities, such as the new administrative capital, and other pivotal cities, such as New Alamein city and 6 October City. These new cities not only provide new housing units, but also provide significant investment opportunities in the real estate market, increasing the diversity of the supply of real estate.
3. Government policies
Government policies play a pivotal role in shaping the real estate market. In recent years, the Egyptian government has launched several initiatives aimed at encouraging investment in the real estate sector, such as initiatives supporting social housing.
Social housing
The government is providing significant support to social housing projects, which contributes to meeting the needs of middle-and low-income citizens. In addition, the government provides tax incentives for real estate developers to invest in this sector, which contributes to the provision of affordable housing offers.
Real estate tax laws
The taxation of residential and commercial real estate may affect real estate investment decisions. It is possible that an increase in taxes will slow down the movement of buying and selling, especially in cases where high taxes are levied on unused real estate.
4. Social factors
Social factors have a huge role in determining the trends prevailing in the real estate market. Social changes contribute to an increase in demand for certain types of real estate or projects.
Social classes and income distribution
The growing disparity in the distribution of income between social classes leads to a discrepancy in the demand for real estate. Individuals from the wealthy classes are looking for luxury real estate in privileged areas, while the middle and poor classes are looking for affordable housing units that provide them with a stable and reasonable standard of living.
Architectural style and interior design
Speaking about social factors, it is noted that changes in the architectural style and interior design of real estate projects are attracting a larger segment of the population. Many people today prefer to live in residential complexes that have all the amenities and entertainment such as swimming pools, fitness centers, and commercial areas.
5. Technological development
Technology is playing an increasing role in the development of the Egyptian real estate market, especially in the field of real estate marketing.
Digital real estate marketing
Real estate companies have started using internet platforms and social media to market their real estate projects. Potential buyers today can look at real estate offers online, as well as watch virtual tours of real estate. In addition, real estate applications help facilitate faster property searches and purchases.
Construction techniques
The development in construction technologies also affects the real estate market. Modern construction technologies that save on construction costs and increase the speed of completion, may reduce the cost of real estate and contribute to the provision of residential units in record time, which significantly refreshes the market.
6. Environmental factors
In recent years, attention to environmental factors has become part of the main concerns in the real estate market. We have seen a marked increase in “green building” projects that rely on conservation technologies, such as the use of solar energy and smart irrigation systems.
Green buildings
Interest in green and sustainable buildings is growing, as many families and companies now prefer to live in buildings that contribute to the preservation of the environment. These projects help reduce electricity and water bills, which makes them more attractive to many customers.
7. Future forecasts
Based on the previous factors, the real estate market in Egypt is expected to continue to grow in the future, driven by increased demand for residential units in new cities such as the new administrative capital. However, economic challenges may affect the ability of individuals to purchase real estate, which requires the development of innovative financing solutions to encourage the demand for buying real estate.
Conclusion
The Egyptian real estate market is one of the important sectors in the national economy, and it is influenced by many economic, social and political factors. Investors and real estate developers should carefully follow these factors to ensure successful investments in the Egyptian real estate market.
