Will real estate prices go down in Egypt in 2023?

Amal Ali 16 Feb 2023

Real estate prices are one of the topics that concern Egyptians now, whether for those looking to invest, buy, or even sell their properties.

In 2022, the real estate sector in Egypt witnessed a rise in property prices as a result of the increase in cost prices and the changes caused by the continuous rise in dollar prices.

Owning property is one of the most important goals that Egyptians seek in different social classes and backgrounds. Owning your home or property always remains a goal to seek & achieve.

With the successive economic crises that started in 2020 with the Covid-19 pandemic, then the quarantine, and later the war between Russia and Ukraine, the real estate market was affected in one way or another, which led to a noticeable increase in prices in all sectors, not just the real estate sector.

In today's article, we will try to clarify the nature of the real estate market and what are the most important factors affecting price indices. In addition, we will try to answer the question: Can real estate prices decrease in Egypt in 2023? Read on to learn more.

We also advise you to take a look at the weekly articles, in which you will find information about the real estate and investment sector.

The real estate market in Egypt

The real estate market in Egypt has certainly proven its ability to succeed and continue to develop despite the many crises that the global economy as well as the Egyptian one is going through.

The real estate market in Egypt is considered one of the largest markets that attract investment due to the large demand for real estate as well as the stability of the market, which guarantees the interests of investors and the preservation of their capital.

Learn more about the nature of real estate investment in Egypt and its difference from the Dubai real estate market through this article, Real Estate Investment in Egypt and the UAE Know the Differences.

The real estate market in Egypt has many successful factors, the first of which is the presence of a large number of real estate developers that strive to provide a luxurious and distinguished real estate product, and they are keen to provide the best price value as well.

However, with the increasing challenges facing the real estate market, it was noticed that there was a decline in the profits of many real estate companies as a result of the slowdown in sales, especially after the recent dollar crisis. On the other hand, the recent flotation of the EGP encouraged many Egyptians abroad to buy residential properties.

In this way, experts say that the real estate market will continue to recover and achieve higher profits.

Challenges facing the real estate sector in Egypt

Many people think that the customer is the only party affected by the price increase, but in fact, all parties in the real estate market are affected by this increase. Beginning with building materials suppliers, as well as the real estate developer, as well as the transportation and construction process.

The real estate market in Egypt faces a set of challenges, and as a result, comes an increase in prices. Here is an overview of these challenges:

Interest rates:

After the dollar crisis and the recent rise in the price of the dollar, banks raised the interest on investment certificates to 25%, which is a very attractive rate that led people to withdraw from investing in real estate and immediately go to buy certificates.

However, specialists confirm that raising the returns on savings certificates will have an effect in the short term only because the real estate sector will continue to have its attractiveness coz it is considered a medium to long-term investment unlike short-term certificates,

Cost increase:

The dollar rate has a direct impact on the real estate sector in Egypt, especially the construction cost of projects. The high prices of raw materials and building materials used in projects force developers to raise the unit price.

The crisis of rising building materials prices is the biggest challenge facing the real estate sector. On this basis, many emphasize the importance of state support for the industrial sector to provide components for the implementation of various projects.

What are the important factors affecting real estate prices?

A group of factors affects any economic sector which leads to a change in the value of prices, whether by increase or decrease. The real estate sector is no different from other markets, and there are a group of elements that have a direct impact on real estate prices, here are the most important of them:

Supply and demand:

Supply and demand are one of the most important economic laws that affect the pricing of any product. Likewise, real estate is no different from other goods.

Any real estate transaction consists of a seller, a buyer, and an offered product. The law of supply and demand states that for any commodity for which demand increases, its price increases accordingly, but if demand is low and the product is abundant, the price will inevitably decrease.

Demographics:

There is no doubt that the number of people benefiting from any good or service affects the price directly. In the case of real estate, demographic change in any country is one of the biggest factors that control the demand for real estate, which affects prices.

The study of population change is useful in knowing the type of real estate that has a higher demand, as well as the areas in which people tend to live, which helps developers and the government to offer real estate projects of higher value and commensurate with the needs of the population. This leads to an equilibrium in the market.

Economic growth:

One of the most important factors that cannot be overlooked when evaluating real estate prices is the economic growth that any country is witnessing. If the country's economy is in a state of constantly evolving and developing, then the real estate sector will consequently thrive as a result of pumping larger investments and attracting foreign investment as well, which provides foreign currency.

Therefore, observing the general state of the economy can give you an idea of the health of the real estate sector and its price trends.

Government efforts

No real estate sector can succeed and achieve satisfactory and successful results for the investor and the customer without having partners to support this success. The state's efforts and plan to develop the economy and support the real estate sector comes as the first stage that paves the way for a successful real estate economy.

Under the supervision of President, Abdel Fattah El-Sisi Egypt has adopted a strong approach to the path of development at a steady pace.

All sustainable development goals have been formulated through Egypt's Vision 2030, which stipulates interest in raising the standard of living for citizens, and this certainly comes through raising the level of residential projects available to them. On this basis, you find that the efforts of the Egyptian government are directed to:

Building new cities

The approach towards building new cities is not a recent matter, but in the last decade, the vision of new cities has become integrated urban expansion that provides livable places throughout the year with full services and facilities, which encourages citizens to get out of overcrowded areas such as Cairo and Giza.

The state's desire to build new cities opens the doors for real estate developers to implement huge projects, which drives investment, whether the local investment or foreign investment.

Among the most prominent new cities that have begun to show results are the New Administrative Capital, New Alamein, and New Mansoura.

As for industrial investment, Tarboul Industrial City is located in Atfih, Giza, to be the first smart and sustainable industrial city in Egypt. The city of Tarboul specializes in offering industrial lands.

Read more about the city Tarboul Industrial City | Your Simple Guide To The City

Road network

One of the largest facilities that serve any real estate project, whether it is a residential project or a commercial project, is the network of roads and transportation surrounding the project, which makes the daily commute of citizens easier and acts as an attraction point for anyone thinking of moving their place of residence.

One of the biggest achievements of the government of President Abdel Fattah El-Sisi is the network of strong roads and bridges that have been implemented in recent years, whether highways linking new cities with each other, governorates or even internal roads that have been restored and maintained to facilitate internal traffic in cities.

All these points affect the prices of the property. The more facilities that the property benefits from, the higher its value and the higher its price when buying and when reselling.

Get to know more Learn About Egypt’s Achievements In Roads And Bridges In Recent Years

Providing social housing projects

One of the largest roles played by the Egyptian government in the real estate sector is the provision of social housing projects that offer real estate projects for different classes, starting from social, medium, and luxury housing.

The presence of these projects achieves a balance in the real estate market because it provides a real estate commodity with reasonable prices for different groups of people.

Read more about social housing projects through this article, Housing For All Egyptians 3 Egypt's Efforts To Achieve The Urban Development

Will real estate prices go down in Egypt in 2023?

The first question that comes to mind of all those involved in the real estate sector, especially clients wishing to buy real estate in Egypt or to enter into a real estate investment, is whether it is possible for real estate prices to decrease or will they continue to increase. Especially with what the current economic situation is witnessing and the rise in dollar prices.

General indicators show that real estate prices are expected to rise as a result of the dollar, and this increase in turn affects the rise in the cost of building materials, cement, and iron, in addition to the rise in the value of transportation.

As it is always said that the best investment opportunity is now because, despite the high real estate prices, it is expected that this will not affect the demand for real estate. Perhaps the opposite is true, as it is expected that the demand for medium-class real estate, especially apartments, will increase, while luxury and high-standard housing are the units that could fall into an inflation crisis due to their availability in the market, but the demand for them will begin to decline.

Learn more about the definition of inflation from this article Save Your Money during the Inflation. Steps To Overcome The Economic Crisis.

If you are interested in the real estate investment sector, we advise you to follow our weekly articles through the Inland website.

You can also learn about the latest real estate projects in Egypt and follow the latest news. And if you are looking for real estate consultation, the Inland team will provide everything you need. Call us now at this number01003366453.