Egypt Construction Market Report 3Q 2024
Construction market overview
Egypt’s economic landscape
The market saw renewed stability in 3Q 2024, with the increased availability of foreign currency and investment interest from the United Arab Emirates (UAE) and Saudi Arabia (KSA) bolstering the market. Egypt’s inflation rate also made a welcome return to more typical levels.
However, some challenges were also seen. Fuel price increases in July led to inflationary pressures and domestic skilled labour shortages also caused issues.
Despite the obstacles, Egypt’s economic landscape is clearly improving.
A closer look at key economic indicators
Growing foreign currency availability
Increased foreign direct investment and remittances from Egyptians working abroad have led to the greater availability of foreign currency helping to reduce fluctuations and uncertainty due to a move away from parallel market dynamics.
Rising investment
Greater levels of investment and interest from UAE and KSA investors are a positive sign for Egypt’s economy, given their strategic interest in the region. Investments will help create jobs and enhance Egypt’s attractiveness to other investors.
Fuel price increases and transportation costs
Fuel price increases contribute to inflationary pressures as higher transportation costs influence goods and services pricing. The government has taken steps to mitigate the impact of rising prices.
Inflation rates and central bank policies
The Central Bank of Egypt has a crucial role in managing inflation and implementing monetary policies. The return of inflation rates to typical levels is a sign of Egypt’s strengthening economy.
Skilled labour shortage and labour exports
The export of labour has positively and negatively influenced the Egyptian economy — it can generate foreign exchange, but it can also cause a brain drain, hindering the domestic economy. Various measures are needed to overcome the skilled labour shortage, including investment in education and training and creation of an environment conducive to encouraging skilled professionals to stay in Egypt.
Foreign reserves and investor confidence
Increasing foreign reserves reflects the strengthening of Egypt’s economy and will increase the confidence of foreign investors looking for strong currencies and stable economies. Higher reserves can also help to safeguard against external shocks and maintain stability.
Growing interest in green finance
Egypt’s growing interest in green finance is recognition of the opportunities offered by climate-friendly investments as the country seeks to address the impacts of climate change while fostering economic growth.
Green finance encompasses a wide range of practices that support environmentally sustainable projects and activities, including green bonds, climate-friendly loans and sustainable investment funds.
Egypt is poised to become a leader in sustainable development in the region, with initiatives to reduce greenhouse gas emissions, protect biodiversity and promote renewable energy.
The government has promoted green finance with measures including establishing the National Green Growth Strategy and developing a green taxonomy to classify sustainable economic activities. Egypt has also sought partnerships with international financial institutions to mobilise green finance.
Damac Park Avenue Phase 1,2, Cairo — Gleeds provided Project Management and Quantity Surveying/Cost Management services.
Increasing focus on green buildings
Green buildings are another important aspect of Egypt’s sustainability agenda as they are designed to minimise their environmental impact with the incorporation of energy-efficient technologies, sustainable materials and water-saving features.
The Egyptian government has implemented policies and incentives to encourage the development of green buildings. Such measures include raising awareness of the benefits, developing building codes that promote energy efficiency and sustainable design and financial incentives.
Green buildings not only reduce reliance on fossil fuels and create a more sustainable environment, they also stimulate economic activity and generate jobs.
Egypt’s digital transformation journey
Egypt is investing in digital technologies and infrastructure. Funds have been spent on modernising information and communication technologies infrastructure and expanding broadband connectivity to ensure the whole population has Internet access.
Many government services have transitioned online. Online registration, payment of taxes and fees and obtaining permits and licenses make it easier for people to access government information and services whilst also reducing bureaucracy, improving efficiency and enhancing transparency.
The government has also encouraged businesses to adopt digital technologies to improve their operations, increase productivity and access new markets. It has also been investing in digital skills development, aspiring to develop a skilled workforce that can drive digital transformation and enhance Egypt’s global competitiveness.
Private sector digital transformation
The private sector is also embracing digital transformation to enhance competitiveness by improving efficiency, reducing costs and improving customer satisfaction.
In construction, there is increasing demand for building information modelling (BIM). BIM is a digital representation of a project that facilitates collaboration, coordination and visualisation of a project.
Clients are increasingly mandating the use of BIM to realise benefits such as the reduction of errors and rework, leading to cost and programme savings. BIM also improves decision-making by allowing better visualisation and communication. BIM can also optimise building performance and reduce operational costs by providing valuable data for facility management and maintenance.
Stable construction materials prices
Construction materials pricing saw greater stability in 3Q 2024. Excessive price increases were prevented by government policies to regulate the construction sector and greater competition amongst suppliers limited the ability of individual suppliers to dictate prices. Lastly, the availability of alternative materials and sources gave flexibility, mitigating the impact of price increases for certain materials.
The relative stability of construction materials pricing has positive implications for Egypt’s economy, leading to a more predictable business environment and helping to maintain project budgets.
It is important to note that there may have been localised price variations due to factors such as regional demand, supply chain disruptions or specific project requirements. However, the overall picture indicates price stability.
Damac Park Avenue Phase 1,2, Cairo — Gleeds provided Project Management and Quantity Surveying/Cost Management services.
