The retail sector in Cairo gained momentum in the third quarter, driven by increased demand from food and beverage tenants for smaller neighbourhoods and community malls with an abundance of outdoor space, according to leading property expert JLL.
During Q3 2020, many retail lease agreements were reverted to original pre-Covid commitments, increasing the rents in primary and secondary malls by 10% and 3% respectively, stated JLL in its Q3 Cairo Real Estate Market Performance report.
Although new leases are being signed and retailers are proceeding with their expansion plans in specific prime areas, the demand for regional and super regional malls still remain subdued.
“The pandemic has brought with it many implications to the real estate sector with the retail market having been affected the most. Now more than ever, it is important for retailers to be able to offer a spacious place for people to meet outside of their home, while ensuring customers are met with positive and unique experiences. To this extent, shopping centres need to evolve to become more than a place to shop,” said Ayman Sami, Country Head, JLL, Egypt.
Cairo’s hotel sector saw the opening of The St. Regis Cairo in downtown, the first major hotel completion in the city for 2020. This milestone has seen 366 keys added to the total stock, with around 440 more keys scheduled for completion during the fourth quarter of 2020.
Although the country has been open for tourism since July 2020, low levels of tourist arrivals have continued to pose downward pressure on Cairo’s hotel sector.
Occupancy levels were registered at 33% in the year to (YT) August 2020, while average daily rates (ADR’s) and revenue per available room (RevPar’s) decreased 16% and 65%, respectively to record $83 and $25 over the same period.
The report also highlighted that Q3 2020 witnessed no new additions to the residential market, maintaining the total stock at 159,000 units.
Sales prices in the primary market remained stable as developers continued to attract demand through extended payment plans, while the secondary market declined by 2% and 9% on an annual basis.
Meanwhile, rental prices continued to perform strongly, with an annual increase of 13% and 21%, respectively, as many tenants continue to wait for their off plan properties to complete.
The sector also saw various project launches, mostly focused on waterfront developments as these areas have become increasingly popular over the summer months, particularly in light of corporates and individuals continuing to work from home.
According to JLL, the office sector in Cairo remained stable at 1.1 million sq m of GLA during the third quarter.
Average office rent rates remained at $325 per sq m, on an annual basis, similar to vacancy rates that also remained unchanged at 11%. While business activity is not back to pre-Covid levels, the market witnessed an increase in leasing enquiries, driven by expansion plans of international corporates, particularly in the e-commerce and pharmaceutical industries.
Looking ahead, around 83,000 sq m of GLA is expected to enter the market by the end of 2020 and rents are likely to remain stable in the short term. Demand is expected to remain focused on smaller fitted-out units as corporates continue to implement cost-reduction measures.-TradeArabia News Service