Relaxed payment plans that give homeowners a window to settle their unit payments over an extended time horizon is another trend which is gaining importance. The devaluation of the EGP, coupled with hikes in inflation translated into weaker economic conditions in 2016 and 2017. As a result, developers are offering attractive payment structures aimed at mitigating these effects, with installment plans reaching up to 10 years in some instances.
JLL’s market findings, show the majority of demand in 2017 was focused on East Cairo (New Cairo). This can be attributed to the growth of employment in New Cairo along with the areas proximity to the airport and other expanding residential areas. Moreover, The New Administrative Capital is seen as a key driver of this latest geo-trend. On the other hand, West Cairo remains a competitive location in terms of unit pricing, which is generally lower and reducing slower than in New Cairo.
Residential sale prices witnessed significant increases in EGP terms in 2017 (more than 50% on a Y-o-Y basis and by 20% between Q3 and Q4 2017). Given that the EGP has strengthened marginally against the dollar over the past year, the gains in USD terms have been even more significant (+59%) and is expected to continue through Q1 2018, until we reach the zero level in USD terms in comparison to 2016 pricing.
One factor supporting the increased demand for residential property has been the maturity of high interest certificates of deposit. This has contributed to the positive performance in the sector during 2018, on the back of increased liquidity.
The changing patterns of residential demand are indicative of broader changes in Egyptian culture, with housing decisions being made on the basis of efficiency and affordability. This trend is likely to increase the level of urban density and help reduce the uncontrolled sprawl of the city experienced over the past few years.