JLL: New ways of working continues to take shape as Cairo’s office market looks to the future

JLL: New ways of working continues to take shape as Cairo’s office market looks to the future

Growth across sectors as Cairo continues to lead the region with positive performance

With businesses adjusting to the new ways of remote working and hot-desking, larger corporates in Cairo continue to focus on space optimization while considering social distancing and hygiene requirements, according to JLL’s Q2 2021 Real Estate Market Overview report released today.

“Cairo is currently the only market in the MENA region to have registered any growth across its sectors, making its recovery faster than others,” said Ayman Sami, Country Head, JLL Egypt. There has also been rising interest among developers in dedicating some of their future office space towards high quality flexible offices. Despite their slow activity at the moment, co-working spaces are expected to witness increased demand by small-to-medium enterprises as well as larger firms in the coming years.”

In Q2 2021, Cairo’s office market witnessed its first office completions of around 27,000 sq m , bringing the total office stock to 1.4 million sq m of GLA. An additional 336,000 sq m of GLA is expected to enter the market in the second half of the year. While demand for secondary offices remained sluggish, demand for high quality grade A office space continued to improve in the second quarter. This was primarily reflected by the commencement of many business transactions that were previously put on hold during the first half of 2020.

The residential market witnessed the completion of almost 6,000 units, bringing the total stock to 218,000 units. Around 15,000 units are expected to be delivered in the second half of the year. While the majority of future supply consists of large mixed-use developments, some developers have recently opted to launch small-scale, smaller-unit projects in a bid to manage cash-flows and reduce financial burdens. Other developers are offering extended payment terms that could now go up to 15 years in efforts to increase demand.استمرار تطوير أساليب عمل جديدة لمواكبة الطلب المستقبلي على سوق المكاتب في القاهرة

“Looking ahead, the various government initiatives and reforms which are leading to improved overall economic conditions are expected to increase consumer confidence and boost both domestic and foreign investor sentiment in Egypt’s real estate market in the short-to-medium term,” commented Sami.

In the retail market, rents remained stable in primary malls while they increased by 5% in secondary malls on an annual basis. Similarly, average vacancy rates remained stable at 11%. According to JLL, the short-to-medium term outlook for the sector remains optimistic as landlords continue to invest in and introduce unique concepts that would keep the market active.

“Some developers of regional and super regional malls have also considered utilizing outdoor retail offerings to align with the shift in consumer preferences toward open-air retail. Likewise, developers of strip retail are expanding their footprint in mixed-use developments as they have recently gained traction among other bigger-format malls,” Sami added.

In Cairo’s hospitality market occupancy levels registered 32% in the YT May 2021 compared to 42% during the same period last year, while average daily rates (ADR’s) and revenue per available room (RevPar’s) decreased by 17% and 37% respectively to record to USD 71 and USD 23 over the same period. New project launches are mainly 4 and 5-star hotels and branded/serviced apartments distributed around mixed-use developments in New Cairo and the New Administrative Capital (NAC), which is expected to be an attractive business hub once completed.

About JLL

JLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and investment management. JLL shapes the future of real estate for a better world by using the most advanced technology to create rewarding opportunities, amazing spaces and sustainable real estate solutions for our clients, our people and our communities. JLL is a Fortune 500 company with annual revenue of $16.6 billion, operations in over 80 countries and a global workforce of more than 91,000 as of December 31, 2020. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle  Incorporated. For further information, visit jll.com.

About JLL MEA

Across the Middle East and Africa (MEA) JLL is a leading player in the real estate and hospitality services markets. The firm has worked in 35 countries across the region and employs over 1000 internationally qualified professionals across its offices in Dubai, Abu Dhabi, Riyadh, Jeddah, Al Khobar, Cairo, Casablanca and Johannesburg.