Egyptian investors and around the world have many questions, some of which carry a positive outlook, while some adopt a pessimistic vision for the future, coinciding with the bad economic conditions that began in global countries since 2020 and are expected to explode in 2023
The real estate market in Egypt, along with other investments, is exposed to many challenges that fall under the nature of both local and global problems. Therefore, many questions were raised about the feasibility of real estate investment in Egypt 2023? Will real estate wealth collapse soon? Is real estate investment still the best investment? What is the size of the expected returns from investing in the real estate market in Egypt amidst the contemporary economic crises?
We review detailed answers to the aforementioned questions after a brief presentation of the real estate market in general in the next few paragraphs
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The meaning of the real estate market
Some believe that the real estate market consists of buildings and residential, commercial and administrative units only, while the buildings are a part of the real estate market, to which many industries are linked in a related economic ring, as the most important industries related to the real estate market are as follows:
- Iron and cement factories.
- Paints and finishing materials factories.
- Flooring factories and companies.
- Timber factories.
- financing institutions.
While the real estate market in Egypt and the world can be divided into several assets on the ground, as follows:
Residential real estate
- It consists of apartments, villas, and all types of residential units.
- Residential investment experiences a near-constant rate of return.
- The value of a residential property increases over time
Administrative real estate
- Buildings for companies and startups.
- The administrative building is designed according to specific specifications that are different from other buildings.
- Administrative real estate is characterized by a high increase in value.
- In addition, it has higher returns than residential
Industrial real estate
- It includes factories, workshops and other buildings with industrial purposes.
- Its value increases with time, with a value higher than the residential one and less than the administrative one.
- It also witnesses distinct and average returns compared to real estate investment in other fields
Commercial real estate
- It consists of malls, shops, cafes, restaurants, and more.
- It is one of the best types of real estate investment and the highest in terms of achieving returns.
- Moreover, commercial investment is one of the most expensive types of investment, so it is not suitable for small investors
Recreational real estate
- Leisure buildings include chalets in coastal towns.
- It is the highest and most expensive in terms of price, value, annual increase rate, and returns
Residential and industrial lands
- It is the land on which the residential or investment building is built.
- It is the lowest price, as it is an empty land, which is scheduled to witness the embrace of buildings in the future
Characteristics of the real estate market in Egypt and the field of real estate investment
The real estate market is characterized by many advantages that attract capital, especially for its great ability to confront various economic crises such as the problem of inflation and the high price of the dollar, especially the great value that was entrenched in the minds of customers after the 2008 crisis that rocked the global markets.
Below we discuss the most important advantages of investing in real estate at the local and international levels:
Real estate is a store of value and assets
- Real estate represents a safe haven and the pillar of the economy for any country besides gold.
- Many clients are looking to freeze their capital in real estate.
- It is one of the largest markets facing economic shocks.
- It is a safe investment that is very difficult to achieve losses
The real estate market has a high value
Global economies are based mainly on real estate investment, as it is the most valuable market in many countries of the world. Below we explain some statistics for the strongest global real estate markets:
- The value of real estate around the world is about 2 trillion US dollars.
- The value of real estate assets in China amounts to $70.7 trillion, leading by about 21% of the global market.
- The United States comes in second, with real estate assets worth $42.1 trillion.
- Several countries occupy the value of real estate assets at about $56.8 trillion, or about 28% of the global real estate market. These countries are: Japan, Britain, India, France, Germany, Brazil, Italy and Russia
Real estate benefits from inflation
Contrary to the fact that inflation causes economic damage at all levels, starting from the currency and even the majority of commodities in the market, real estate as a product or fixed asset not only has the ability to face inflation, but also increases its value in parallel with the rate of inflation.
Local currencies lose part of their value equal to the rate of inflation, so real estate is considered a safe vessel for the value of money as it works to develop it according to the rate of inflation that the economy suffers from, and thus the investor does not lose the value of his capital
The ability to face economic recession
One of the economically recognized things when waves of recession occur is the actual impact of the prices of products and commodities on the decline in order to attract customers to buy, limit losses, and try to balance both supply and demand, but on the contrary, we notice a rise in real estate market prices in Egypt and the world in times of recession, but by a small percentage.
The reason behind the resilience of the real estate market in the face of all challenges is that it is a fixed and frozen asset that does not witness a loss. Rather, it is one of the solutions that many clients and citizens adopt as a refuge from the severe economic downturns
Real estate is a source of passive income
One of the most important advantages of real estate investment is that it is a source of passive income, which is the monthly income or fixed return that you get without spending much in order to collect it, and it is the result of previous accumulated efforts, so renting real estate is one of the most common methods in the field of real estate investment
Real estate investment is a field of low risk
Despite the real estate investment strategies that recommend the presence of personal qualities in the investor, such as love of risk and risk-taking, it is a natural risk that does not constitute much compared to other investment fields.
Low risk means the difficulty of losing capital in this investment, which means that there is no possibility of loss as the investment amount can be recovered in the worst cases, except in some rare cases such as natural disasters
Disadvantages of real estate investment
After presenting the most important features of the real estate market in Egypt, we discuss some of its potential defects or obstacles that may limit the capabilities of some, the most prominent of which are the following:
Difficulty selling in a crisis
The real estate market in Egypt often faces difficulties in buying and selling during waves of inflation and economic recession, due to the reluctance of some to buy and the inability of the largest segment of society to keep pace with developments in the economic market, and thus they do not have the financial liquidity to invest.
It is considered one of the temporary defects that are specific to only a certain category of investors, as the majority of market clients do not prefer to sell their assets and properties during economic crises, which would preserve the value of their money
An investment not for everyone
Real estate investment, especially in the Egyptian market, which is witnessing a rise in prices, requires possessing a certain financial solvency to achieve the desired returns and profits. Not as high feasibility as free investment
The future of the real estate market in Egypt 2023
All global expectations point to a possible increase in the real estate market, taking into account the existence of various crises in the economy and food, so some statistics for the real estate market expectations for the year 2023 come as follows:
- Potential increase in the Middle East and globally, by an average rate of 18% to 25%.
- The future of the real estate market in Egypt 2023 may witness an increase in real estate from 25% to 35%.
- Rental properties are set to increase from 8% to 13% on average
What are the reasons for the increase in real estate prices in 2023?
The real estate market is expected to witness a rise in prices for the following reasons:
- Markets are likely to be hit by stagflation, i.e. high prices and no selling.
- The world may witness a constant fluctuation in the price of the dollar, and thus the change in real estate prices in Egypt after the rise of the dollar.
- The instability of the energy markets, along with the lack of stability in the global stock market.
- The effects of the Russian-Ukrainian war, as well as the food crisis, in 2023.
- In addition, the local Egyptian market is witnessing an economic problem represented by the high levels of debt to the International Central Bank, the dollar shortage crisis and the flotation of the pound
All of the aforementioned reasons lead to an increase in real estate prices in Egypt in 2023, which are expectations that may become more significant and influential in reality
Real estate transactions are one of the crucial decisions in an individual’s life, and with the spread of various real estate scams and unreliable companies, the real estate website Korastsherot offers you a selection of the most important experts in the Egyptian real estate market, to help you make a proper purchase decision
The most prominent questions about the real estate market in Egypt 2023
Is the real estate market expected to collapse in Egypt by 2023?
It is one of the possibilities that arose as a result of the fears of some customers about the economic conditions that the world is going through, so this hypothesis is considered incorrect, given that real estate is a vessel or a safe haven besides gold, especially in times of crisis, as it has proven its worth in facing all the escalations and economic problems over the past years, whether at the local or international level.
What are real estate prices in Egypt after the rise in the price of the dollar?
It is expected that the real estate market will witness a big jump during the year 2023, after what the local economy went through in terms of currency floatation, inflation and a lack of dollar stocks. Therefore, many expectations go to an increase of 25% to 35% or more in Egyptian real estate
Is real estate investment the best option in 2023?
There are many solutions that investors mainly resort to during economic fluctuations or problems of low purchasing power of the currency, as follows:
The Stock Exchange
The latter has proven its failure in facing various economic problems over the past years, while the stock market and digital currencies are unsafe and unstable investments. On the other hand, foreign currencies cannot be considered the ideal option for investment, especially with the possibility of its collapse.
In contrast to gold and real estate investments, which have proven successful at all levels without achieving any significant losses
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