Egypt’s $50bn FDI sparks growth in tourism, housing construction

Egypt’s construction industry is projected to grow at a CAGR of more than 8 per cent until 2029, global property services firm JLL said in a report, driven by increased government spending, active public-private partnerships, and continued investments in residential and mixed-use sectors.

JLL said in its Egypt Construction Market Intelligence report that the North African country accounts for $515bn or 12 per cent of the MENA region’s unawarded project pipeline, despite the prevailing national and global economic challenges.

The value of residential projects in Egypt totalled around $36bn in Q1 2024, ranking the country third after Saudi Arabia and the UAE, while mixed-use projects totalled $115bn.

Fuelled by a strong start in Q1 2024 and with construction and handovers, Cairo’s residential sector added more than 7,000 units in the January-March period and another 24,000 units are expected to be delivered throughout 2024.

The latest data from JLL shows that the average sale price in areas such as 6th October surged by a record 83 per cent year-on-year (YoY) while rental prices rose by 42 per cent. Similarly, average sale prices in New Cairo soared by 95 per cent YoY and rents jumped by 43 per cent.

Egypt’s tourism sector kicked off 2024 with a boost from a new EGP50bn initiative aimed at expanding hotel capacity by nearly 250,000 rooms by 2028. The country is expecting to welcome 30 million visitors in the next four years.

“Drawing on the strengths of its tourism sector and in line with its Vision 2030 goals, Egypt continues to expand its construction sector through continued investments and partnerships to solidify its position as a leading market in the region,” said Laura Morgan, Market Intelligence Lead MEA, Project & Development Services at JLL.

The Egyptian government has been accelerating efforts to address macroeconomic pressures to stabilise both market volatility and devaluation of the local currency. The pound underwent its fourth round of significant flotation against the dollar in March 2024, following which Egypt’s central bank liberalised the exchange rate to attract foreign currency and combat record inflation.

“Currency volatility, inflation and geopolitical challenges are impacting market dynamics in Egypt. However, increased foreign direct investment (FDI) commitments provide ample liquidity, and strategic government reforms are reducing market speculation, helping boost investor confidence,” said Morgan.

Earlier this year, the Arab world’s most populous nation signed a deal with the UAE to develop a prime stretch of its Mediterranean coast that would attract $35bn in investments – a breakthrough in the government’s efforts to end Cairo’s worst foreign exchange crisis in decades.

The UAE deal marked a turnaround in fortunes for the North African country. It unlocked more financing for Egypt, with the International Monetary Fund pledging to lend $8bn, the European Union made a $8.1bn commitment, and the World Bank will provide more than $6bn.

Read: Egypt government launches $21bn ‘South Med’ real estate mega-project