Property buyers who have set their sights on Egypt have probably wondered why property is so cheap. There are several reasons and in this post we will look at them to shed light onto issues that might save you money.

While Egypt has always attracted tourists from all over it has also become a bit of a property investor heaven thanks to the very low prices.

One of the reasons why it is so cheap to buy real estate in Egypt is the fact that the country has a number of fault lines and has suffered a number of earthquakes in the past. Being in a similar position to California, the question here is not whether the country will suffer another earthquake, but more so when. Naturally this could deter many investors from buying, since the thought of losing it all within seconds can be very daunting.

Low magnitude earthquakes in Egypt can have a far more shattering effect than in other countries. This is due to the lower building standards seen commonly in the country. The lack of stringency has many investors in shock when they discover their new house to be full of cracks underneath all that lovely paint. While well established cities like Tokyo could handle a higher magnitude earthquake quite well (due to stringent building standards), Cairo would be devastated by a much lower scale.

It pays to be very observant if you dabble with the idea of buying an investment property in Egypt and double check the standards before you sign the dotted line.

Egyptian property hot spots and where to buy

Not everything is bad though and by using some common sense anybody can buy themselves a great investment. The secret to making profits though lies in buying in the right area. Not every region in Egypt is considered hot.

Popular hot spots in Egypt are within the area of the Red Sea coast. Sharm El Sheikh is particularly hot. With favourable local planning laws against high rises, only 20% of every block of land can be built on and each property is limited to three stories maximum. Most buyers look between the cites of Alexandria and El Alamein.

Another hot spot is Ain Soukhna, it lies on the Gulf of Suez and is a convenient 90 minute drive from Cairo. Many city folk go there on weekends, relaxing and unwinding from their busy lives.

Hurghada lies further south and mainly attracts a younger, more active crowd, like scuba divers and young yuppies who like their nightclubs. Nearby Sahl Hasheesh has also made some waves with not one, but three developments, attracting a lot of interest.

What to buy?

Most property investors who look to Egypt to widen their portfolio settle for a nice apartment in one of the many resort developments. For British investors this means living in five star luxury for a price tag as low as £15,000 for an off the plan property.

For example, an off-plan property costs from £15k in Hurghada whereas a three bedroom waterfront villa in Soma Bay walks for £120,000. A lot of properties range in the £40k region, making it real cheap for most overseas buyers.

The safest bet would be a duplex, villa or apartment in one of the many popular tourist resorts as many of them promise average rental yields of 11 percent. Plus a bustling resort will always attract a wealth of tourists looking for suitable accommodation. Ideal for an investment property.

Investors will also appreciate low stamp duty rates, death succession duty at 7 percent and not having to pay capital gains tax.

How to buy?

Since you already know the possible disasters of buying property in Egypt, you are best off to get buildings checked by a European structural engineer before you buy. Or else, you can find a developer who is trained on European architecture.

This is a must for any investor looking to spend their hard earned cash in Egyptian property if they want to be rather safe than sorry.

See how serious this could be by clicking on this link. Not a pretty sight at all is it?

Tourism impact on Egypt

The constant strong tourism has had a strong impact on Egypt, especially within the last three years or so. Until 2005, capital growth was actually slow with static prices all along. Only in the last few years have we seen some measurable growth.

This has resulted in many former sleepy fishing villages transforming themselves to first class, bustling tourism resorts. The economy has certainly benefited from this growth but one question remains.

With low cost flights, easy access and short travel times from pretty much anywhere in Europe wouldn’t it be easier to visit Egypt on holidays every year, rather than invest money to buy property?

What do you think?

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