34 | THE EGYPT REPORT Q&A panel
www.opp.org.uk | AUGUST 2010
Think like an Egyptian
What is really happening on the ground in the Egyptian property market? OPP has been talking to a group of local industry leaders to fi nd out what they think about this promising hotspot. Geoff Hadwick reports.
What is the overall state of the international property investment market in Egypt right now? “During 2007 and the fi rst half of 2008, prices of Egyptian property were increasing faster than just about anywhere else in the world. In the fi rst half of 2008 alone, prices in the major resort towns of Hurghada and Sharm El Sheikh increased by an average of 30% and sales for the majority of developers there were brisk. Despite the economic downturn prices have not been dropping in Egypt with the majority of projects still increasing by an average of 10% to 15% per annum. After a relatively quiet 2009, sales markets are coming back strongly now.” Peter Mitry. CEO. Egypt Real.
“Better than 2009 … in fact it has
picked up a lot since November 2009 to an average of between 15 to 20 units a month. We saw a slow-down in June because of the World Cup but we believe things will pick up again in September.” Tarek El Saadi. President. Sharm El Sheikh Real Estate.
“The property market in Egypt remains strong despite the global economic downturn. The country is economically stable following growth of 4.2% in 2009. Investing in property in the country is a good prospect for buyers from both the domestic Egyptian market and overseas. There is no purchase tax, no inheritance tax, and no capital gains tax. There are low stamp duty taxes, low duty rates, and yields of 5%-11% can be achieved depending on property type. And it’s not just the sun and sea that are attracting investors. The rental return can prove
profi table as tourism is booming. 13 million tourists visited Egypt last year, a fi gure the government hopes to increase to 14 million by the end of 2011. Considerable growth is expected
throughout 2010 as demand rises.” Peter Riddoch.
buyers are Cairo, Alexandria and the coastline along both the Red and the Mediterranean seas. These areas offer good employment opportunities as well as a wealth of entertainment and leisure facilities. The average temperature on the Red Sea coast is 28 degrees C and the area boasts sunshine 365 days a year!” Peter Riddoch.
“Egypt’s two main tourist towns
Where are the main / most popular areas for buyers?
“The most popular areas are Cairo, Hurghada, Makadi and Sahl Hashish … especially Sahl Hashish which has outstanding potential in the market because it not just another Red Sea tourist destination but also a well- planned and zero pollution area.” Amin Serag. CEO. Orascom Development and Management.
“Sharm; Hurghada; Gouna; Sahl Hashish and Makadi have all been very popular. Today, the upcoming destination is Marsa Allam due to the richness of its diving sites and its untouched natural environment.” Aliaa Hussein. CEO. ERTDA.
“The coming place for investors
and international buyers is Hurghada, especially resorts there like Gamsha Bay.” Mohamed Abdel Wahab. Head of offi ce. Palm Hills.
“Sharm El Sheikh because it is well-established and has weekly flight arrivals from all the major European airports including around 250 from the UK; 300 from Italy and 450 from Russia.” Tarek El Saadi.
“The most popular areas for
of Hurghada and Sharm El Sheikh are currently the most popular destinations for foreign buyers. The new super-resort of Sahl Hashish which is being built to the south of Hurghada is starting to attract more and more interest from affl uent buyers as they realise that it will be the premier resort to be built on the Red Sea. Further down the coast, there is increasing interest in the relatively undeveloped Marsa Alam area, which boasts perhaps the best, unspoiled beaches in the country. Despite high rental yields, Cairo has never become a major destination for foreign buyers and sales in Luxor are a fraction of those in the coastal resorts. The resort town of Ain Soukhna is popular with rich Egyptians due to its close proximity to Cairo, but has failed to catch on with European buyers due to the lack of a local airport.” Peter Mitry.
What is the mortgage situation like for an overseas buyer wanting to borrow to invest in a property in Egypt?
“There are very few mortgage products available at the moment, and those that exist are still quite new. However, we are seeing many international banks starting to grow in Egypt, and (with the relaxation of mortgage law a couple of months) ago we anticipate that reasonable mortgage packages
will hopefully soon be available to everybody. I also believe that the way property is registered will have to be remodelled before the banks can comfortably lend monies on completed properties.” Barry Clark. Marketing Director. Orbit Alliance.
“Nothing was readily available for non- Egyptians until recently … and if they did fi nd something it was at a very high interest rate average of 10%-plus. This is one of the main reasons that Egypt did not suffer from the credit crunch … we have very little mortgage or credit card debt.” Tarek El Saadi.
“The work by the now defunct
Mortgage Finance Authority has opened up the markets for lending on Egyptian Property by all and sundry. Foreign-based loans are still in the embryo stage as they work out just how to regulate, to repossess and to register title deeds to everyone’s satisfaction. The lending rates of interest are still typically around the 9% to 10% mark plus for most lenders. Add to this the rather slow process of validating incomes, credit checking, evidence of title deeds etc and you will not be surprised at the lack of entry by some of the better known lenders. The main question is … Who will make the fi rst move?”
Ian Marsh. Consultant. The Kimidar Group.
“The property fi nance sector in Egypt is yet to mature. It was not really available to Egyptians before 2004. The key is in the regulations which need to guarantee the fi nance entity its rights as well as establishing the necessary protocols between the concerned banks. Some developers provide their own fi nance programs
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