Foreign firms see real estate opportunity in Egypt turmoil

Lucrative deals in Egypt’s undersupplied residential, office markets, say analysts
Foreign firms see real estate opportunity in Egypt turmoil
Egypt’s undersupplied real estate sector offers lucrative opportunities to foreign developers keen to capitalise on future demand for residential and commercial housing, analysts said (/AFP/Getty Images - for illustrative purposes only)
By Shane McGinley
Thu 21 Apr 2011 01:04 PM

Egypt’s undersupplied real estate sector offers lucrative opportunities to foreign developers keen to capitalise on future demand for residential and commercial housing, analysts said.

“Looking at the fundamentals, Egypt, in the medium to long-term, has very strong fundamentals,” said Faisal Khan, a principal at private equity firm Abraaj Capital, which has around $7.5bn under management.

“The Grade A supply of office space is roughly 700,000 sq m and the demand today is 4.2 million sq m,” he said. “Egypt remains a really attractive place to invest.”

Egypt's real estate sector has been thrust into the spotlight after mass protests ejected the country's president amid accusations of corruption. Analysts say the industry now needs to switch its focus towards middle-income property to ensure its longer term survival.

The government is under pressure to provide housing for young people in Egypt, where lacking a home is seen as a major obstacle to marriage.

Wael Tawil, CEO of Abu Dhabi-based real estate firm Baniyas Investment and Development Company, said state-backed institutions, especially from Asia, saw investment opportunities in Egypt’s infrastructure sector.

 “We do feel Egypt will be a strong magnet for investment across the board,” he added.

Gulf states have been among the first to invest funds to help resuscitate Egypt’s economy. In Saudi Arabia, an unnamed developer has pledged to invest $7bn to build 200,000 residential units for low and middle-income Egyptian buyers, the country’s state news agency said.

The Kuwait Investment Authority (KIA) last week said it launched a company with capital of $168m to invest in Egypt's economy.

Real estate consultancies selling into Egypt have also reported a rise in interest from overseas buyers, as the declining Egyptian pound makes luxury coastal property more affordable.

“The most long-sighted investors will turn events that have occurred in Egypt into an opportunity,” said Steven Worboys, managing director of UK-based Experience International.

“There has never been a better time to invest in Sharm el Sheikh property due to the low Egyptian pound.”

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