Egypt: IMF loan faces another dilemma

With its economy showing no sign of recovery and the inflation on the rise, Jones Lang LaSalle has stated that property prices have been escalating especially in two large well known Cairo satellite cities; New Cairo and 6th of October City.
In its latest report, the two cities have witnessed an average price rise of 8% since the beginning of the year. It blames the developers for such a rise claiming that the hikes in prices are “largely due to developers seeking to pass on increases in construction costs to end buyers.” The report claimed that the situation is a sign that the IMF deal could be far from conclusion because “high inflation will make it more difficult to reduce subsidies and increase taxes as required by the International Monetary Fund (IMF).” Although the country is still struggling with its finances, the implementation of the IMF proposed reforms led to a violent demonstration against such measures.
New Cairo remains relatively expensive compared to the 6th of October because an apartment is $1,180 per square meter, a 4% rise, while the latter is at $1,071 per square meter but records an 8% rise. Prices of villas also rose by 9% and 7% respectively.
“These challenges have overshadowed the Cairo real estate market which has seen further delays in both construction and leasing commitments during the quarter. Despite these uncertainties, there remains ongoing demand, with Q1 seeing a number of significant leasing transactions in the office market and the launch or commencement of new residential and retail projects,” the report pointed out.
However, rent remains around the average price of a $1,000 per month and the report concluded that the hotel industry in the country is “slowly” recovering.