Egypt’s property developers have suspended sales as the market feels the pinch of a stronger dollar and the higher cost of building materials. The local real estate market is going through what analysts describe as ‘repricing’, citing the high global prices of energy and freight.
Against a backdrop of growing inflation rates, prices of residential units in Egypt have been increasing since the central bank devalued the Egyptian pound and raised interest rated by 100 basis points on 21 March this year.
“Developers have increased prices by 15-25% on their new launches. In terms of the market dynamics, we have seen buyers rushing to buy real estate in the medium term, and this is due to the fact that they would like to hedge against the drop in value of the local currency against the US dollar,” Ayman Sami, country head of real estate and investment management firm JLL Egypt, told local news outlet Al-Monitor.
According to him, the devaluation of the Egyptian pound had many implications on the real estate market with the primary challenge being managing costs.
“The devaluation coupled with the high rate of inflation has pushed up construction costs, which meant for the developers that their profitability has been highly impacted. In terms of the market dynamics, we have seen buyers rushing to buy real estate, and this is due to the fact that they would like to hedge against the drop in value of the local currency against the dollar,” Sami explained.