Egypt has maintained a positive economic backdrop despite the effects of the Covid-19 pandemic and this will remain supportive of its real estate industry with demand for commercial real estate assets expected to remain stable to a little stronger during 2021. An improving regulatory background combined with the government's ongoing development programmes will also encourage some growth in investor appetite for the limited amount of investment-grade commercial property that is currently available across the country. Overall, the supply of commercial real estate will increase but at a pace that will encourage mild rental growth across all three sub-sectors during 2021.
The expect demand for real estate across Egypt to continue to improve in Q221, supported by a combination of an upbeat economic backdrop and the continued development of the country's new cities; the New Administrative Capital, New Alamein City and New Mansoura City. While there domestic consumption will be a little constrained and domestic and international tourism will take some time to return to pre-2020 levels, we hold a positive outlook for real GDP growth in the country and maintain our forecast for an expansion of 3.2% in the year 2020/21 (ending June 2021).
Cairo continues to be the main focus of commercial real estate investment activity, supported by a good appetite for new opportunities as they arise, particularly investment-grade office and retail real estate. Meanwhile, a strong tourism sector boosts demand for retail facilities in Giza, with demand set to improve in 2021 following the weak level of activity in 2020. Alexandria remains popular for industrial real estate and developments due to its industrial trade links with the Suez canal and the rich oil and gas pipelines that run through the city. Warehouse demand is steady to growing in the city here, and with exports poised to maintain strong growth in the medium term, we believe that there will continue to be good demand for industrial assets in Alexandria.
While Egypt is expected to be one of the stronger performers in terms of real GDP growth levels in 2021, we expect consumption will be a little constrained as the effects of the pandemic take time to fade. This will help encourage demand across the three subsectors and rental rates are forecast to experience a determined recovery in Cairo, Giza and Alexandria and follow an upward trajectory over the medium-to-long term, supported by a growing population and improving economy.
Egypt's industrial real estate market activity continues to be focused heavily on the industrial hubs close to Alexandria and Cairo. The industrial property rental rates expecting to rise in Alexandria in 2021 and also in Cairo and Giza, as conditions remain favourable for landlords, partly due to increased demand for warehouse and logistics premises to support growth in the country's online retail market along with ambitions to become a central hub in Africa. As such, Cairo will benefit from the a new logistics village by Cairo International Airport that should bring in new demand to the market, although an increase in vacancies will limit growth in rental rates in the near term.