Egypt May Receive Billions in Investment from Sovereign Wealth Funds
Investors around the world have approached Egypt’s real estate market with caution since the start of the pandemic. The country has made great strides since the pandemic and then the conflict between Ukraine and Russia drove up prices and inflation led to massive devaluation of Egyptian real estate. In fact, Egypt continues to capture headlines with exciting and unique projects like the Forbes International Tower set to be built as part of the New Administrative Capital and become one of the first skyscrapers in the world to have net zero emissions. Projects like this have attracted investors despite financial problems and could end up making Egypt one of the world’s best comeback stories.
Sovereign Wealth Funds Target Egypt as Key Investment
In a recent report, real estate giant Knight Frank hinted at the possibility of $120 billion getting slated for investment in Egypt from sovereign wealth funds in the Middle East in the coming years. Knight Frank bases this claim on the fact that the leading global superpowers have almost universally renewed an interest in investing in Africa and speeding its recovery from the pandemic. These superpowers include the United States, the United Arab Emirates, the United Kingdom, China, and South Korea. Ensuring that Africa recovers quickly from the pandemic helps create a strong global economy, and a key part of Egypt’s recovery is its real estate sector. Already, this sector accounts for a large percentage of the nation’s income.
Egypt has easily captured the attention of investors with a total population greater than 109 million, a strategic geographics location, and an economy poised for explosive growth. Beyond that, Egypt has a rich heritage and important cultural implications for the entire region. Already, nations within the Middle East have invested a great deal in the future of Egypt. Saudi Arabia, for example, has already allocated more than $6 billion across about 6,000 different projects throughout the country. These projects span a number of different sectors, including industry, construction, agriculture, tourism, and more. In 2022, Saudi Arabia’s Public Investment Fund created the Saudi Egyptian Investment Co., which identifies emerging sectors for investment as a strategic way to increase Saudi investment in Africa.
Egypt Works to Appeal to a Range of International Investors
Currently, Egypt is positioning itself for further investment by addressing whatever hesitations investors might feel in channeling more money toward the country. Luckily, it is not hard to argue that Egypt contains massive growth potential. The current real estate portfolio in Egypt contains about 2 billion square feet of property with impressive potential. In Cairo, the market is already on a growth trajectory, especially within the residential sector. According to Knight Frank, $20 billion was invested in real estate in Cairo last year with $16 billion of it within the residential sector alone. Average residential property prices increased by about 10 percent over the course of 2022 as a result of this investment. This trend will likely continue with a market that continues to rapidly expand.
Some neighborhoods in Cairo stand out for their recent growth. For example, apartment prices in New Cairo rose 24 percent in 2022 with a high of $450 per square meter. Villa prices in New Cairo reached $690 per square meter, which is growth of 8.5 percent. Apartment prices also surged in Sheikh Zayed City to $430 per square meter, a total increase of 27.8 percent from the prior year. During the same period, villas in this area increased prices by 2.1 percent to $650 per square meter. With more investors from the Middle East focused on Egypt, it will be interesting to see how these trends continue throughout 2023. Right now, industry experts are looking to areas outside of Cairo, especially the north coast, as key markets for growth, especially as individuals in the region get more interested in capitalizing on the weakness of the Egyptian pound and purchasing second homes.
Knight Frank Positions Itself to Capitalize on Egyptian Real Estate
A renewed interest in Egypt is perhaps best represented by Knight Frank itself, which recently opened a new office in Cairo. This office will let the consultancy attract new clients in the country while additionally serving as a great way for current clients to get connect to investment deals. The Cairo real estate industry alone is worth $20 billion with $16 billion for the residential sector alone. In other words, now is a great time to get a foot in the door before large, institutional investors claim all the great investments. According to Knight Frank, the new office is a direct result of current client requests for facilitating deals in Egypt. Investors around the globe are recognizing the potential in the country, especially as major projects like the New Administrative Capital finally break ground. Egypt is poised to help bring some of the wealth of the Middle East into Africa to spur even more development.