Gateway: Third Interest Rate Cut to Spur Real Estate Market Recovery
The decision to cut interest rates by 2% for the third time this year sends a strong signal of monetary easing and is set to breathe new life into Egypt’s real estate market, according to Dr. Nourhan El-Tour, CEO of Gateway Real Estate Consultancy.
El-Tour explained that the Central Bank’s policy reflects a clear shift toward supporting economic growth and stimulating the investment climate by reducing borrowing costs for both individuals and companies. “The move signals that inflation is relatively under control, and that the priority has shifted toward revitalizing economic activity and driving investment,” she said.
Impact on Real Estate
According to El-Tour, the real estate sector—one of the most sensitive to interest rate changes—will be among the main beneficiaries. Lower rates make mortgage financing more attractive for homebuyers, while developers gain easier access to funding for expansions and new projects.
Institutional investors are also expected to channel more capital into real estate as returns on bank deposits decline, potentially boosting secondary market activity, particularly in the mid- to high-end segments.
Challenges Remain
Despite the positive outlook, El-Tour cautioned that rising construction costs, tied to foreign currency fluctuations and import-dependent materials such as steel, cement, and finishing works, could limit downward pressure on property prices. She also warned of speculative risks, with some investors entering the market for hedging purposes, which could drive prices higher instead of stabilizing them.
Another challenge lies in consumer purchasing power. Even with lower interest rates, current property prices remain out of reach for many households. “At 17%, mortgage costs are still relatively high for the middle class. A reduction to 15% would mark a turning point, bringing monthly installments closer to affordability for a broader base of buyers,” she noted.
Outlook
If rates fall below 15%, El-Tour expects the market to enter a phase of strong expansion, with higher sales volumes and stronger mortgage activity. She anticipates that ready-to-move and nearly completed units will attract the most demand, as buyers look to capitalize immediately on favorable financing conditions.
While prices are likely to see relative stability or gradual increases due to steady construction costs, El-Tour concluded that the latest rate cut represents a crucial step toward reviving demand and unlocking new growth opportunities in Egypt’s property sector.