Egypt is Worth Considering, if You are Looking for a Cheap Holiday...

Egypt is Worth Considering, if You are Looking for a Cheap Holiday Home

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Egypt is once again on the map of overseas property investors after Sam Zell listed the country as one of the top three property investment destinations worldwide. Zell who made billions back in 2007 when he sold his Equity Office Properties portfolio to Blackstone for an estimated $38 billion also mentioned Brazil and China as hot contenders for the run of hottest investment opportunities worldwide.

Egypt’s three key areas, namely Hurghada, Sharm El Sheikh and Cairo have shown strong house price growth over the last year or so. New developments in New Cairo and on the Red Sea have shown the strongest appreciation, giving investors new hope for good profits.

The reason Egypt is considered hot property is mainly because of a very strong tourism industry that has seen numbers doubling between 2001 and 2006. Especially rental investment properties are favoured by investors as these are very easy to occupy.

With only US$60 per SQ. FT, buyers can own a brand new three-bedroom villa in New Cairo for $163,452.

This new development in the Egypt market is a nice turn from the dark days of oversupply in the middle 90’s when the property crisis was at its highest level. The low property prices are attracting investors with extra cash flow, allowing even first time property buyers a slice of the market.

Another bonus is the mortgage law that was introduced in 2001, giving banks the power to repossess properties and evict defaulting owners.

Egypt’s exports have also more than doubled in recent years and with a shortage of skilled labour, wages for local contractors have increased, further boosting the economy.

How to Snap up Your Own Slice of Egyptian Real Estate

If you consider buying into the Egyptian market, you have the option of registering your property. If you do, then you are limited to two units with a maximum of 4,000 square meters. The purpose must be for a family member to live in and you cannot sell the property within the first five years of ownership.

If you don’t register the property, you won’t be limited by these restrictions but instead you might be subject to paying capital gains tax. One way around these restrictions is what is called the “signature validity court verdict”. The verdict avoids formal registration and allows for the resale of the property right away.

To own Egyptian property it is essential to apply for and get Egyptian residency. The only exception is Sharm el Sheikh where only 99 year leases are offered.

While Egypt is an opportunistic market right now, potential buyers do need to consider the downsides of owning property there. Safety issues plus a government that is seen as corrupt and unpopular might be reason enough to deter many from grabbing this opportunity with both hands.