Forecasts of a summer rebound in the Egyptian real estate market have proven overly optimistic. The market has been stuck in recession over the last two months, with real estate companies serving the luxury housing market taking a particularly noticeable hit, in the midst of a slump in demand and a lack of liquidity.
Experts estimate that demand for luxury housing has declined by approximately 50 percent in comparison with the summer of 2008. They said that low sales and demand were to be expected as a result of the lingering worldwide downturn.
A number of real estate agents stressed that demand had been almost non-existent throughout the current year. They said that their companies had expected to see a rebound in sales during the summer season, however all indicators pointed to a continued downward trend in demand. Some cited a 60 percent decline in demand across all of Egypt’s housing markets.
The agents, who preferred to remain unidentified, noted that sales were extremely low. They attributed the low sales numbers to a lack of market liquidity, the refusal of real estate companies to offer discounts and a lack of financing.
One agent called the summer of 2010 a “season of lies”, referring to the starry-eyed predictions made earlier in the season of an imminent rebound in the real estate market.
Real Estate Visions President, Hisham Shoukri said that sales had confounded the optimistic expectations of some companies. He blamed the downturn on the month of Ramadan, arriving this year in the middle of the summer season. According to Shoukri, although demand for housing had not completely subsided, it was much lower than in 2007 and 2008. He said that demand was strong in May, but then slackened during the months of June and July.
Shoukri said that construction had also slowed recently due to a lack of government infrastructure projects. Even though the government pumped LE25 billion into the economy in the form of infrastructure projects during the recent world economic crisis, demand was still lagging, he said.
Shadi Sherif, president of the analysis division at Cairo Capital, an investment and real estate company, stated that the repercussions of the international financial crisis were still being felt in the Egyptian real estate market. He said that the market would need a relatively long period to recover, predicting that it would begin next year.
Translated from the Arabic Edition.