Real estate market and macro economic overview of Cairo

For Middle East investors Cairo ( the 9th most populated city in the world ) with 18 M inhabitants represents a natural geographic diversification.

Adding to the new Investment Laws facilitating foreign investment in the real estate activity and to the lower labor and business costs compared to the

Mediterranean region Cairo is becoming for corporate and industrial companies a main attraction. The residential market's profile of Cairo is

characterized by :

- a strong demand base and significantly under-leveraged market

- major undersupply in the middle and affordable housing sector

- a High end sector in approach of saturation

- No significant price decline in 2009 despite the global crisis

- Newly developed product designated for a wider segment of buyers

- Low level of debt due to prudent banking policies.

Cairo's residential market overview

In an attempt to alleviate the congestion in Downtown Cairo, a plan was initiated in the 70's to build various satellites cities around Cairo. Ultimately the satellite cities' master plan is to accommodate up to 9 M inhabitants.The tendency of the market of these new urban cities is to move slowly from the high end segment which shows an over-supply, from a more balanced position as a number of developers have now initiated housing projects, targeting the massive middle income market.

The constant growth of the population and a constant decrease in household size are the two main drivers of demand for middle and upper middle residential units. Adding to the fact that the main reason in Cairo for moving apartment's is getting married, as such the demand is primarily driven by city's rate of new marriages estimated at 100 000 per year and that middle class customers typically buy based on their savings and regular income, both of which are in constant progress, sales of this segment are expected to hold up best and contribute toe support demand.

Finally Cairo's resident market is based on strong fundamental growth expectative due to the fact that over the past five years the mobility rate of household's in greater Cairo was extremely low ( less than 10 %). This mobility rate is expected to increase significantly for all the reasons previously exposed and also due to the introduction of new and more flexible mortgage laws.

As a consequence it appears that Middle and upper middle income housing will provide with the biggest opportunities within the Cairo residential market over the next five years.