Feasibility Study for a Coworking Space in Egypt

How a coworking space makes money and where it loses it

A coworking space leases a large floor on a long contract and resells it in pieces: a seat for an hour or a day, a fixed desk by the month, a closed private office for a company, a meeting room by the hour, and a registered address for a company that never sits there. Rent, electricity, internet and the front-desk team are paid every month whether the seats fill or not, and a seat left empty today cannot be sold tomorrow. So a coworking space feasibility study starts from two numbers: occupancy for each product separately, and revenue per square metre compared with the rent and fixed cost per metre.

The real risk is not a weak month. It is the commitments you sign before the first member arrives: a multi-year lease with annual increases and an upfront deposit, and a fit-out paid once that has to be recovered well before the lease ends. Then there is the large client in a private office: if they leave, the project is exposed.

VAT after Law 149 of 2026

The VAT law imposes the tax "on goods and services... except as excluded by a special provision", the general rate is 14%, and anyone whose sales reach the registration threshold must register within thirty days¹; the threshold is EGP 500,000². Law 149 of 2026, published on 28 July 2026 and in force from the following day, then rewrote the exemption item for buildings: the sale and rental of non-residential units stays exempt "except the rental of buildings and units used as an independent seat for managing an activity", with an exception for premises of certain activities, including educational and health ones³.

That reaches you in two ways. First, the rent on the floor you lease is no longer exempt, so a VAT-registered landlord may add 14%. Second, we found nothing in the exemption list covering coworking memberships or serviced private offices, so the example treats them as taxable at the general rate. But a registered person deducts the tax already charged on inputs from the tax due on sales¹, so VAT on rent and fit-out comes back through deduction if your sales are taxable. So an unregistered freelancer pays EGP 342 for a day priced at EGP 300 net and cannot recover the EGP 42, while a registered company deducts it. Check the classification of each product with your accountant before publishing prices.

Registered addresses for companies: high margin, hidden risk

Many spaces sell a "virtual office": an address on which the client's company is registered, plus mail handling. From Maher Consulting Firm's files, the General Authority for Investment (GAFI) accepts a coworking-space contract as a company's registered office provided the contract runs for at least one year, with excluded activities that cannot use such an office, among them domestic and overseas labour recruitment, pesticides and pest control, and security companies. A May 2025 report in Business Monthly also states that companies can now register coworking spaces as their official business addresses⁴. We found nothing setting out the space's liability if a client uses the address for an unlawful activity or leaves it.

So make registered-address contracts at least one year long, ask about the client's activity before signing so you can turn away excluded activities, keep an up-to-date register of the companies registered at your address alongside each written contract, and state in the contract how it ends and how you notify the authorities if a client stops paying or leaves. In the example this line is only 7.3% of revenue, yet it covers 26.3% of profit because it uses almost no seats or electricity. MaherCF can handle your company formation.

Licensing: public shops and training rooms

Law 154 of 2019 defines a public shop as "every establishment used to carry out any commercial or craft work or to provide services... for profit" and allows it to operate "only with a licence from the competent centre", with an inspection fee of up to EGP 1,000 and a licence fee between EGP 1,000 and EGP 100,000⁵. The text does not name coworking spaces, so ask the licensing centre how your space is classified before the fit-out, because the requirements are built into the design.

If you plan to rent your room to vocational training centres licensed by the Ministry of Labour, Ministerial Decree 264 of 2025 requires a centre's premises to be "independent of any other commercial or educational activity", requires training at the licensed premises, and allows the centre to request "written permission" to train elsewhere⁶. Your space is therefore unlikely to qualify as a centre's licensed premises, and a centre that rents your room needs that permission. The details are in the training centre feasibility study.

Illustrative example: a 400 m² space with 70 seats

This is an illustrative example whose figures are assumptions to show the method, except the wage, social insurance and electricity tariff. Prices and costs are net of VAT and the space opens 26 days a month:

• Private offices: 6 offices with 26 seats: one 8-person office at EGP 36,000 a month, three 4-person offices at EGP 20,000 and two 3-person offices at EGP 15,000.
• Dedicated desks: 20 desks at EGP 5,000 a month.
• Open area: 24 seats sold as a flexible membership at EGP 3,500 (members come 12 days a month on average) or as a day pass at EGP 300.
• Two meeting rooms: a small one at EGP 300 an hour and a large one at EGP 500, each bookable 10 hours a day, with 80 hours a month booked in the small room and 40 in the large one.
• Registered address: 25 companies at EGP 1,000 a month.
• Variable costs (drinks, printing, consumables, payment fees): 7% of revenue.

Overall, 49 of 70 seats are occupied, or 70%, with the open area only half full.

Fixed monthly costs: rent EGP 100,000 (EGP 250 per m²). Electricity EGP 19,780: we assumed 7,000 kWh a month, and the commercial tariff for consumers above 1,000 kWh is 279 piastres per kWh from April 2026 consumption, plus a consumption stamp of 3 piastres per kWh and a EGP 40 customer service charge⁷. Two internet lines from different providers EGP 14,000, and generator and UPS fuel and maintenance EGP 4,000. The team: a community manager at EGP 16,000, two receptionists on two shifts at EGP 8,500, and two assistants at the private-sector minimum wage of EGP 7,000 in force since 1 March 2025⁸, plus the employer's 18.75% social insurance share⁹, for EGP 55,812.5. Then marketing EGP 15,000, booking software and accountant EGP 7,000, cleaning and maintenance EGP 9,000, insurance and sundries EGP 5,000. Total EGP 229,592.5, or EGP 574 per m².

Profit is before income tax and depreciation, and the owner draws no salary. If occupancy of every product falls by the same proportion and the address line stays as it is, break-even is at 49.0% of seats: occupancy-driven revenue can fall 30% before the space loses money. The method is in break-even and working capital.

Cash: fit-out, deposit and the slow months

Fit-out (assumptions): finishing, glass partitions and lighting EGP 900,000, air conditioning EGP 420,000, furniture EGP 480,000, network, access control and cameras EGP 160,000, generator and UPS EGP 220,000, kitchen and branding EGP 80,000, company formation and licences EGP 40,000, for EGP 2,300,000. Add a three-month rent deposit of EGP 300,000, two months of rent during fit-out EGP 200,000, one month of salaries before opening EGP 55,812.5 and launch marketing EGP 40,000. Total EGP 2,895,812.5; the breakdown is explained in start-up costs in Egypt. On top of this, temporarily fund the VAT on the fit-out and its rent: you pay it before opening and then deduct it from the VAT on your sales, with any balance carried forward to later periods¹.

The lease runs 5 years with a 10% annual increase, so rent goes 100,000, then 110,000, 121,000, 133,100 and 146,410 a month, a total commitment of EGP 7,326,120, more than three times the fit-out. Because the lease starts with the fit-out, lease year two begins in operating month 11. Occupancy reaches the base level gradually: 30% of it in month one, then 10 points more each month until month eight.

(Month 9 has the same flows as month 10; figures rounded.) The space loses money until month five, and the deepest cash need is EGP 3,248,625. At full operation the fit-out alone takes 2,300,000 ÷ 88,467.5 = 26 months to recover. But the cumulative balance including the deposit only turns positive in operating month 39, which is month 41 of a 60-month lease, assuming prices and other costs rise 10% a year from month 13. The EGP 10,000 rent increase in month 11 needs only a 3.1% price rise to offset, so write an annual increase into private-office contracts that lands before yours does. The gap between profit and cash is covered in cash flow for small businesses.

What if occupancy drops, rent rises or the largest client leaves?

The gap between 70% and 50% is the gap between a project that recovers its fit-out in about two years and one that barely covers its costs: EGP 84,231 of profit disappears while rent and salaries stay put. A 15% rent rise at renewal needs a 4.7% price increase to offset. The 8-person office tenant alone is 10.5% of revenue; losing them cuts profit by EGP 33,480 a month, and leaving that office empty for 4 months (months 9 to 12) costs EGP 133,920 and pushes the return to a positive balance from month 39 to month 41. So ask private-office tenants for advance notice of departure and a deposit, and do not let one client go much beyond a tenth of revenue, as in the example.

The two levers: product mix, and electricity and internet

Product mix. Compare products by revenue per metre, not by price: a private office earns EGP 815 per metre on a fixed contract, the open area EGP 1,022 at only 50% occupancy, and the meeting rooms EGP 1,100 while booked just 23.1% of the time. Extra hours sold in the rooms or extra days in the open area go almost entirely to profit, as does renting the large room for workshops and training. For pricing, see how to price your product.

Electricity and internet. In a summer month at 10,000 kWh the electricity bill rises from EGP 19,780 to EGP 28,240 at the same tariff⁷, so size air conditioning for the worst month. Internet is the product you actually sell: one line down for a full day can cost you your largest client's membership, so two lines from different providers and a generator or UPS for the network are not a luxury in the numbers.

Common mistakes in a coworking space feasibility study

1. Using one occupancy figure for the whole space instead of occupancy and revenue per metre for each product.
2. Signing a lease shorter than the fit-out payback, or one with no rent-free period during fit-out.
3. Ignoring the annual rent increase without a matching clause in client contracts.
4. Building revenue on one or two large clients with no advance notice of departure.
5. Selling a registered address on a contract shorter than a year or to an excluded activity, and without records on every company registered at your address.
6. Overlooking VAT on rent after Law 149 of 2026, and on your prices to individuals.
7. Costing electricity on the yearly average instead of the summer months.

Frequently asked questions about a coworking space feasibility study

Sources

1. Financial Regulatory Authority. قانون الضريبة على القيمة المضافة رقم 67 لسنة 2016 وفقًا لآخر تعديل (المواد 2 و3 و16 و22) (in Arabic). Checked 22 October 2026.
2. Egyptian Tax Authority. ما هو حد التسجيل الإلزامي لضريبة القيمة المضافة، وما هي الأنشطة المعفاة منها؟ (in Arabic). Checked 22 October 2026.
3. Egyptian Tax Authority (Official Gazette, issue 30 bis A). قانون رقم 149 لسنة 2026 بتعديل بعض أحكام قانون الضريبة على القيمة المضافة (in Arabic) (2026-07-28). Checked 22 October 2026.
4. Business Monthly (AmCham Egypt). How Coworking Spaces Are Powering Egypt's Startup Boom (2025-05-28) — secondary source. Checked 22 October 2026.
5. Mohamah.net (law text from the Official Gazette, issue 39 bis B). القانون رقم 154 لسنة 2019 بإصدار قانون المحال العامة (المواد 1 و2 و10) (in Arabic) (2019-10-01) — secondary source; Manshurat (scan of the Official Gazette, issue 39 bis B). قانون المحال العامة رقم 154 لسنة 2019 (نص الجريدة الرسمية) (in Arabic) (2019-10-01). Checked 22 October 2026.
6. Youm7 (decree text). وزير العمل يصدر قرارًا وزاريًا ينظم التدريب المهنى ويربطه باحتياجات السوق (القرار 264 لسنة 2025، الشروط العامة والتزامات المركز والمادة 17) (in Arabic) (2025-12-28) — secondary source; El Watan News. «الوقائع المصرية» تنشر قرار وزارة العمل بشأن تنظيم التدريب المهني (العدد 291 تابع في 25 ديسمبر 2025) (in Arabic) (2025-12-30) — secondary source; Sadany & Partners. القرار 264 لسنة 2025 | ترخيص التدريب المهني في مصر (in Arabic) (2026-08-02) — secondary source. Checked 22 October 2026.
7. Egyptian Electric Utility and Consumer Protection Regulatory Agency (EgyptERA). Electricity Tariff Starting From April 2026. Checked 22 October 2026.
8. Ministry of Planning and Economic Development. الاجتماع الأول للمجلس القومي للأجور: رفع الحد الأدنى لأجور القطاع الخاص إلى 7000 جنيه (in Arabic) (2025-02-09). Checked 22 October 2026.
9. Andersen Egypt. Social insurance in Egypt (contribution rates under Law 148/2019) (2026-06-30) — secondary source. Checked 22 October 2026.