Foreign investors shun Cairo property in face of political turmoil

The flight by foreign companies from violent unrest in Egypt threatens to drive up vacancy rates at offices and shopping centres and prompt international investors to shift funds to sub-Saharan real estate.

The army overthrew and imprisoned President Mohammed Mursi in July and the ensuing crackdown on his Muslim Brotherhood movement has killed about 900 people. This has prompted many multinational companies to cut back operations or pull out staff, particularly from central Cairo.

Weaker demand means property investors, who had been lured by Cairo's established business district, could swap what was North Africa's only viable property investment market for comparatively stable cities in sub-Saharan Africa, property experts said.

"The demand for class-A office space has almost disappeared overnight," said Ahmed Badrawi, managing director of Sodic , one of Egypt's biggest developers and behind the Eastown scheme in New Cairo, a massive development of offices, shops and homes.

The list of firms that have cut or suspended operations in Egypt, sold off businesses or pulled out staff in recent months includes Apache, Chevron, General Motors , Electrolux, BASF, BG Group and BP.

A series of developments that tried to capitalise on a shortage of high-quality offices in Cairo have recently been completed, while others are under construction, but there are doubts over whether they will find tenants.