Property Driving Egyptian Economy
Despite the extent of the country’s recent setbacks, the real estate sector has proved comparatively strong and sturdy. In 2001, the total value of investments in the sector was over £650 million. By the end of 2012, this had grown to nearly £2.6 billion. The strength and growth of the real estate sector is proving an important source of support for the wider economy. It is certainly helping to keep the labour market buoyant. In 2012, the sector employed 3.2 million – 14.9% of Egypt’s total workforce. In 2013, 8.3% of the country’s GDP came from the real estate sector.
Of course, Egypt has had an eventful few years and has been through a lot since 2013, but through good and bad the property sector has remained robust. Construction and development now accounts for roughly 20% of Egypt’s GDP, and is projected to keep growing significantly over the next few years. Predictions suggest that by 2020, the sector will show growth of 70% compared to 2012, reaching more than £7 billion in total value.
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The property sector in Egypt plays a role in over 90 construction-related industries and attracts a lot of foreign investment into Egypt’s economy. Over the whole of 2015, combined domestic and foreign investment is expected to reach a level of around £4.75 billion. Property naturally drives the construction industry, and construction in turn has recently been a driver of growth in a diverse selection of related industries such as cement, metals, energy and furniture.
The strength of this industry is partly down to high demand – as you’d expect from a country with a population of 85 million including around 800,000 new marriages per annum. There is currently a housing deficit in Egypt, and new families are adding demand for more than half a million more homes to that deficit every year. Demand is consistently strong across all social strata at present, though the higher end of the property market – specifically homes targeted at the expanding upper and upper-middle classes – sees especially strong demand at present and is therefore the primary focus of many of Egypt’s biggest developers. The expansion of the younger population in Egypt, which is expected to continue for some time yet, and continuing urban expansion are also putting pressure on a number of key sectors.
Tourism is another driver of the Egyptian property market. The country has long been a popular tourist destination for its warm climate, excellent beaches and world-famous historic sites. During the worst of the country’s recent problems, tourist numbers plummeted, but now the situation has switched to recovery, with new demand for tourist property in Egypt being created in many key resorts.
It is not just short and long-term residential property that sees demand either. In the face of urban expansion, income growth, and increasing tourism, businesses in many sectors are thriving. Roughly a fifth of currently-ongoing development projects in Egypt are offices or retail space, and these are also playing a role in making Egyptian property one of the most powerful forces in the country’s economy.