Page last updated at 23:13 GMT, Thursday, 18 June 2009 00:13 UK

Egypt faces real estate collapse

By Sherif Maher
BBC Arabic, Cairo

Empty apartment block in Cairo
Apartments remain unfinished, waiting for prices to rise

BBC correspondents from around the world are taking the pulse of the world economy, and this week they are focusing on the state of the property market.

In the Egyptian capital, Cairo, the streets are as busy as ever, but all around, newly-built apartments lie empty.

They are the visible sign that the real estate boom that hit Cairo and most of Egypt in the 2007 and 2008 is now over.

Prices of housing and land are now falling.

"A square metre of land has fallen from 2800 Egyptian pounds (£305) to as low as 2000 now," says Khalid El Sha'er, a Cairo property developer.

The newspapers are full of adverts for new apartments and the buildings themselves are often festooned with billboards proclaiming the merits of the new developments.

But still the apartments remain empty.

There used to be a boom for the housing market from 1 June when Egyptian workers returned from their jobs in the Gulf with money to invest.

But this has not happened this year.

"Prices are falling because building materials are cheaper and the market itself is unnerved by the global financial downturn. And yet potential purchasers are still not buying because they think prices may fall even more," explained Essam Hammad, an expert on the property market in Egypt.

There have been falls of 15% in the luxury and upper middle-class property market in Egypt.

Stagnation

But for those at the lower end of the market, there has been no such decline.

Nour El Hady works for a small business and is going to get married this month.

He has struggled to find somewhere for himself and his future wife to live.

"Buying an apartment is out of the question for me so I have been looking for somewhere to rent. Even then it has been difficult to find somewhere I can afford. I was looking for nearly 6 weeks before I could find somewhere suitable," he told BBC Arabic radio.

Mr Al Hady's experience reflects the other side of the coin of Egypt's housing market.

At the top end of the market, people are not buying because they expect prices to fall further.

At the lower end of the market, possible sellers would rather leave flats empty rather than sell at what they think could be near the bottom of the market.

The result is stagnation for the poor, who did not benefit from rises in property prices, and arenow failing to gain from their fall.



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