Egypt’s Construction and Real Estate Sector: A Promising Boom

Updated 7/8/2023 9:00:00 AM

The expansion of the construction and real estate sector in Egypt depends on several factors including the continuous growth of the population, which exceeded 100 million. Add to this, the fact that real estate has been the preferred investment asset and is considered a safe haven for Egyptians to maintain the value of their savings against various economic crises.

In this Factsheet, Arab Finance explains the importance of real estate activities in Egypt, how these activities attract foreign investments to the country, and the potential role of real estate exports in collecting foreign currency.

The construction sector has made a significant contribution to employment in Egypt. With a 4% year-on-year (YoY) growth rate, 875 million Egyptians have been working in construction and building activities at the end of 2022, representing around 14% of total employed Egyptians, according to the Central Agency for Statistics and Public Mobilization’s (CAPMAS) labor market survey for 2022.
In the first quarter (Q1) of 2023, the average daily wage rate in construction activities reached EGP 145, while the rate was around EGP 137 per day for real estate and renting activities, according to CAPMAS’ monthly statistical bulletin of May 2022.
The construction and real estate sectors are considered engines for the Egyptian economy. The gross domestic product (GDP) of the two sectors combined in Q1 of fiscal year (FY) 2022/23 has grown by 17% YoY to EGP 397.4 billion, accounting for around 17% of the country’s GDP in the mentioned period.
In Q1 2022/23, the implemented public investments in construction and real estate hit around EGP 4 billion, which represented 3.3% of the country’s total public investments.
The Egyptian government recently announced the allocation of EGP 273 billion as investments in the urban development sector in FY 2023/24. Real estate investments will acquire 37% of this amount, equivalent to EGP 102 billion. Furthermore, construction and building sector investments are planned to reach 51 billion.
Egypt provides long-term investment opportunities that attract foreign investors and companies to the region. Foreign direct investment (FDI) inflows to the construction sector in Q2 2022/23 reached $145.5 million, while inflows to the real estate sector recorded $184.1 million. The FDI inflows from the two sectors combined represented 5.7% of total FDI inflows to the country.
The exports of construction services remarkably increased by 303% to hit $251.4 million in Q2 2022/23, compared to $62.4 million in Q2 2022/23. The sector’s exports accounted for around 3% of Egypt’s total service exports.
The value of global real estate exports surpasses $200-300 billion annually, of which Egypt acquires only 0.1%. Hence, in late 2022, the Egyptian government announced that it was working on a plan to boost the country’s exports from the real estate sector.
In 2022, the estimated number of existing housing units in Egypt reached 33 million. In addition to this, around 100,000 units were expected to be added during the mentioned year.
In Q1 2023, the demand for property ownership increased as exchange rates increased, resulting in 522 ongoing residential and mixed-use projects worth $309.9 billion. The demand is further expected to hike and record a compound annual growth rate of 4% by 2025.