Cairo’s retail sector gains momentum, says JLL
The increased demand is driven from F&B tenants for community and neighbourhood centres with outdoor space
JLL’s Q3 Cairo Real Estate Market Performance report has revealed that the retail sector in the city has gained momentum in the third quarter of 2020.
This increased demand is driven from food and beverage tenants for smaller neighbourhoods and community malls with an abundance of outdoor space. During Q3 2020, many retail lease agreements were reverted to original pre-COVID commitments, increasing the rents in primary and secondary malls by 10 per cent and 3 per cent respectively, the report stated.
Commenting on the figures, Ayman Sami, Country Head for JLL (Egypt), said: “The pandemic has brought with it many implications to the real estate sector with the retail market having been affected the most. Now more than ever, it is important for retailers to be able to offer a spacious place for people to meet outside of their home, while ensuring customers are met with positive and unique experiences. To this extent, shopping centres need to evolve to become more than a place to shop.”
However, the demand for regional and super regional malls still remain subdued, although, new leases are being signed and retailers are proceeding with their expansion plans in specific prime areas, the report added.
According to the report, Cairo’s hotel sector saw the opening of The St. Regis Cairo, the first major hotel completion in 2020, in the city. Another 440 more keys are scheduled for completion during Q4 2020, while the St. Regis added 366 keys to the total stock.
It further stated that low levels of tourist arrivals have continued to pose downward pressure on Cairo’s hotel sector with occupancy levels registered at 33 per cent in the year to August 2020. Additionally, average daily rates and revenue per available room decreased 16 per cent and 65 per cent respectively, to record $83 and $25 over the same period.
The residential sector, meanwhile, reported no new additions in Q3 2020, maintaining the total stock at 159,000 units. The report highlighted that sales prices in the primary market remained stable as developers continued to attract demand through extended payment plans, while the secondary market declined by 2 per cent and 9 per cent on an annual basis. Meanwhile, rental prices continued to perform strongly, with an annual increase of 13 per cent and 21 per cent, respectively, as many tenants continue to wait for their off plan properties to complete.
JLL reported that the office sector in Cairo remained stable at 1.1 mn sqm. of GLA during Q3 2020. Average office rent rates remained at $324 per sqm, on an annual basis, similar to vacancy rates that also remained unchanged at 11 per cent. While business activity is not back to pre-COVID levels, the market witnessed an increase in leasing enquiries, driven by expansion plans of international corporates, particularly in the e-commerce and pharmaceutical industries, it added.
The report concluded that around 83,000 sqm. of GLA is expected to enter the market by the end of 2020 and rents are likely to remain stable in the short term. Demand is expected to remain focused on smaller fitted-out units as corporates continue to implement cost-reduction measures.
