Cairo real estate prices increased in Q1 2013 but the rise may not be reflection of the health of Egyptian property. Jones Lang LaSalle explained that values increased by eight per cent across Cairo's two satellite cities during the beginning of 2013. However, instead of being driven by demand, the hike is the result of developers looking to pass on increases in construction costs to end buyers.

This is set against a backdrop of economic turmoil and high inflation, meaning investors should still show caution when entering the villa and apartment market. Nonetheless, asking prices for apartments in New Cairo increased by four per cent to $1,180 (£771.09) per square metre, while villas increased their value by nine per cent. In the 6th of October area, apartment prices increased by eight per cent to $1,071 (£699.86) per square metres. Villas also increased their asking price by seven per cent.

For investors in the holiday let market, the good news is that rental costs remained stable throughout Cairo. However, the New area enjoyed slightly higher rents of $1,000 (£653.47) on average. This suggests there is still demand for property in the two satellite cities, which are rich with culture and history.

Unfortunately, rising inflation is still making things difficult in Egypt. Jones Lang LaSalle explained in its report: "High inflation will make it more difficult to reduce subsidies and increase taxes as required by the IMF (International Monetary Fund). These challenges have overshadowed the Cairo real estate market which has seen further delays in both construction and leasing commitments during the quarter."

Nevertheless, the firm stresses that despite obvious barriers, there is ongoing demand and Q1 witnessed several significant leasing transactions in the commercial market, particularly in the office sector. This bodes well for the Cairo's performance overall, indicating a rise in business confidence and growing activity across the board. Tourism is also starting to recover and in January, the hotel occupancy rate stood at 51 per cent. This is a five per cent rise on the same month last year. 

source: http://www.propertyshowrooms.com/egypt/property/news/cairo-price-rises-not-market-reflection_312715.html

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