Real Estate Powering Egypt’s Economy in 2015
In the last few critical years of Egypt’s history, the growth of its economy has depended heavily on the development of the country’s real estate sector.
The real estate sector in Egypt is dynamic and reliable, serving as the backbone of the nation’s economy despite the political and economic setbacks endured in recent years. The value of real estate investments in Egypt has witnessed a sharp increase since 2001 – from €890m rising to €3.5bn by the end of 2012, representing a growth rate of 27.5%.
Labour markets in Egypt have been favourably assisted by buoyancy in the country’s property market. In 2012, the real estate sector absorbed as much as 14.9% of total employment, hiring an equivalent of 3.2 million people and in 2013 the sector contributed 8.3% to national GDP. Industry insiders have since adjusted their outlook for Egyptian real estate, projecting the sector to grow 70% from €6.3bn in 2012 to just over €10bn by 2020.
There are several factors attributed to the strength and importance of the real estate sector in Egypt. Firstly, it contributes to more than 90 industries related to construction. In fact, with the recent abundance of construction projects either currently underway or still pending final agreements, the building and construction sector is expected to attract investment of around €6.5bn in 2015 from both domestic and foreign investment, making it one of Egypt’s biggest revenue sources.
Additionally, the construction sector has driven continued expansion of related industries including metals, cement, furniture and power generation. Currently, the construction and development sector in Egypt makes up 20% of national GDP, rendering it one of the sectors most responsible for the economy’s increasing metabolism.
Demand for housing remains high at all income levels
In a country of more than 85 million people and some 800,000 marriages every year, demand for housing remains high at all income levels, say real estate companies and analysts. The country’s big listed developers tend to cater solely for the upper middle and upper classes, among whom demand has remained strong, as buyers have sought security in bricks and mortar during the economic uncertainty.
Each year Egypt not only requires more than half a million homes to meet the demands of new families, it must also continue to satisfy the existing housing deficit. Essentially with every year, the demand for houses and related infrastructure continues to exceed supply.
Improving tourism and rising visitor numbers in Egypt provide another demand-stream, with foreign investors seeking high value opportunities in the country’s many popular resorts. Ahmed Badrawi, Managing Director of SODIC , a leading private sector real estate development company said: ” You only have to look at the housing supply gap to get an idea of the potential within the real estate sector. The number of homes being brought to the market today barely scratches the surface of the hundreds of thousands of units needed on an annual basis “.
With a rapidly expanding young population – predicted to double over the next 25 years – the demand for amenities to compliment the expanding urbanisation is also putting pressure on various sectors, such as commercial and retail real estate. Already 27 new urban cities have been built around Egypt with plans to increase this number to a further 59 by the end of 2017.
Around 20% of projects currently under development in Egypt are allocated to office and retail space. Even in Cairo, there has traditionally been a dearth of property purpose-built for business, with most companies operating from converted residential space.
There are plenty of high value investment opportunities in both Egypt’s commercial and residential property markets and with a high level of consistent demand from domestic buyers, buy to let opportunities are becoming widely available, particularly in the suburbs of Cairo. As more financing and mortgage options become available in Egypt, its real estate sector has the potential to soar in the coming years.
Article by +Roxanne James on behalf of Propertyshowrooms.com
Business Booms for Malaysia’s Hotel Sector
2014 was a good year for Malaysian tourism, attracting international brands like Kempinski, Four seasons, Fairmont, Ritz Carlton, Ibis and Hilton to Kuala Lumpur’s expanding market, with plans to commence operation in the capital over the next three to five years.
Visitor numbers throughout last year increased more than 10% to 18.4 million, despite the drop in tourists in reaction to the disappearance of Malaysian Airlines flight MH370 in March 2014. Malaysia ‘s government have pulled out all the stops to support investment in its hotel sector granting Investment Tax Allowance and Pioneer Status for new hotels with 4 and 5 star ratings. Hotels that are 100% foreign owned also qualify for these tax incentives, which is a big attraction for international hotel brands.
The government’s Malaysian Investment Development Authority (MIDA) has identified the country’s tourist sector as one of the 12 National Key Economic Areas (NKEAs,) set to attract investment in its private sector to drive the nation towards high-income status and global competitiveness.
The goal of Malaysia’s government is to push tourism by investing heavily in its infrastructure and providing attractive incentives to foreign hoteliers seeking to expand in Southeast Asia. The government’s Tourism Transformation Plan sets a target of 36 million tourist arrivals annually, contributing €36bn to the economy each year by 2020.
Latest hotel developments in Kuala Lumpur include a joint venture between Singapore developer Oxley Holdings and Dubai’s Jumeirah Group – the luxury hotel brand behind the Emirate’s iconic Palm Islands. The JV plans to operate a 190-room luxury Jumeirah hotel with a further 273 premium residences carrying the group’s brand in Malaysia’s most visited destination, it’s capital city – Kuala Lumpur.
Commenting on Oxley’s fifth luxury hotel in the region, chairman and chief executive Ching Chiat Kwong said: ” This partnership with Jumeirah Group further enlarges and reiterates our presence in the Malaysian market. ” He added that Oxley are seeking to launch more hotel developments in Malaysia, Cambodia and Indonesia as part of its strategy to expand its investment in property.
In terms of smaller-scale property investment in Malaysia, the strong dynamic in the country’s tourist sector in resort areas where there is significant and rising demand provides plenty of value growth opportunities, particularly in Kuala Lumpur.
Affordability remains a major issue for domestic buyers in Malaysia and sales volumes fell by around 8% year on year during 2014, while prices soared 72% over the same period of time. The country’s central bank, Bank Negara introduced cooling measures to curb rising household debt that stands at almost 87% of GDP, with loans for properties forming the bulk of household debt at around 47%.
With property prices at levels beyond the reach of many Malaysian nationals, foreign investment in the country’s private rental sector is on the rise. Apartment prices in Kuala Lumpur are reasonable at between €1,300-€2,600/m2 and value growth in the city has reached stability. The prime attraction for investors in the capital is rental income.
Gross rental yields in Kuala Lumpur have registered a decline over the past year, with rents not keeping pace with rising nominal prices. The highest value growth investment is in the 120m² apartment category which has recorded gross returns of between 7% and 8% over the last 12 months.
As major names in the international hotel business continue to construct and open luxury operations in Malaysia, demand for investment property in resort areas is set to increase significantly. With plenty of yield opportunities in both the country’s domestic private rental market and the tourist sector, there is plenty of scope for investment in Malaysia at the current time.
Article by +Roxanne James on behalf of Propertyshowrooms.com
Tourists Flock to Cape Verde in 2015
Cape Verde’s National Statistics Institute (INE) reported a 2% annual increase in visitor numbers in the first half of 2015, putting the country on target for a bumper year for tourism.
In the first six months of the year, more than 278,000 visitors arrived on the beautiful archipelago off the northwest coast of Africa, attracted by its fabulous beaches known as jumping-off points for windsports and a great location for diving among shipwrecks.
During the second quarter, Cape Verde hosted 116,200 tourists representing a 4.8% increase on the same period of 2014, despite the country’s relatively under-developed tourism infrastructure. Overnight stays the first six months increased 3.5% to almost 1.8 million with hotels remaining the most popular type of accommodation for 87.3% of visitors to the tiny archipelago nation.
The data reveals that the second quarter of the year saw mostly British tourists arriving in Cape Verde, representing around 25% of international visitors. Brits holidayed for an average stay of 9 days, with the island of Sal as the most popular resort location, accounting for around 46% of overnight stays in hotel establishments.
Cape Verde is a former Portuguese colony and maintains close links with Portugal and the Eurozone. Special partnership status has been granted by the EU and in 2008 Cape Verde joined the World Trade Organisation. The country has improved significantly to achieve economic stability with plenty of potential for further growth, particularly through its tourist sector.
The country’s democracy is one of Africa’s most stable and Cape Verde was officially removed from the United Nations’ list of Least Developed Countries in December 2007. The country’s outlook has never been better according to the World Bank , recently reporting that ‘good governance, sound macroeconomic management, trade openness and increased integration into the global economy, as well as the adoption of effective social development policies underpinned an impressive development trajectory’.
Around half of Cape Verde’s 482,000 population lives on the biggest island, Santiago which is home to the capital city, Praia. Tourism is mostly concentrated on the island of Sal which has the country’s only international airport capable of receiving charter flights from Europe. New and bigger international airports are scheduled to be opened in Santiago, San Vicente and Boa Vista, boosting residential property prices in those areas.
Almost every habitable island of the archipelago has new development in construction. Capital values are consequently rising by 10%-15% annually and yet property in Cape Verde is still very much a bargain at around €1,200-€1,650/m².
Despite the recent rise in visitor numbers, Cape Verde remains largely undiscovered to international travellers, despite its unique cultural vibe and breathtaking beauty. Data from the INE from 1997 shows that 45,000 visitor arrivals were recorded for the year compared with more than 500,000 expected in 2015, illustrating the country’s massive rise in popularity among international travellers over the years.
Consequently, the archipelago has been overlooked by property investors and the market for holiday rentals is almost non-existent. A studio unit in popular Santa Maria is currently priced at around €81,000 which would offer a yield in the region of 8%-9%, according to local realtors.
The ten archipelago islands of Cape Verde are clustered 280 miles off the coast of Africa, approximately one hour south of the Canary Islands. Notable for its vibrant blend of Portuguese and African cultures the country is also blessed with long stretches of fine white sandy beaches and an all year round perfect temperature of between 25 and 34 degrees.
With booming tourism and discounted real estate, it won’t be long before investors zoom in on Cape Verde’s bountiful property market. For investors seeking a lower entry level property purchase, there are investment opportunities in the country’s hotel sector currently attracting interest among buyers of income generating assets, starting from as little as €10,000.
Article by +Roxanne James on behalf of Propertyshowrooms.com
Business Partners
