AUGUST 2010 |
www.opp.org.uk
Developer profi le
THE EGYPT REPORT Q&A panel | 35
to clients and also work closely with mortgage companies and banks to try and facilitate the process.” Aliaa Hussein.
“Currently it is not possible for overseas buyers to arrange mortgages from Egyptian banks in order to fi nance their property purchases. This situation has been under review for several years now by the major banks in Egypt and it is likely that, but for the global banking crisis of 2008, key players on the Egyptian banking scene would have already started to make mortgages available to overseas purchasers. As it was, they got ‘cold feet’ because of problems with banks over- extending themselves in other markets ... their plans were put on hold.” Peter Mitry.
“Egypt is considering its mortgage
situation now more carefully than at ever before. We have several mortgages companies that can fi nance on and off plan but with different percentages. We are learning from the mistakes that others have made regarding this issue.” Mohamed Abdel Wahab.
What do you fi nd are the main objections raised by potential buyers? “Quality … Egypt is a third world country and does not compete with Europe in terms of building standards.” Tarek El Saadi.
“Build quality is of paramount importance … many fi nd it diffi cult to locate properties built to the high standards they expect.” Peter Riddoch.
“The main objections come from
problems with off-plan projects. It quite often happens that projects miss their initial completion dates by several months – years in some cases. In extreme cases, projects are left unfinished.” Peter Mitry.
What do you regard as key projects
for Egypt right now? “Egypt caters for different markets. Sahl Hashish-Hurghada has general appeal whereas Sharm El Sheikh is targeted at Europeans. Egyptian and Arab buyers like Alexandria. The Luxor and Aswan region is still largely unexplored.” Tarek El Saadi.
“Sahl Hashish … The first two
phases include an old town, an underwater sunken city, golf courses, and many 4 & 5 star hotels etc. ERC still needs to complete on more of the communal areas but the third phase of Sahl Hashish - which is a conceptual phase called La Mondial – looks breathtaking.” Barry Clark.
“The only fully integrated tourist
resort that has shown a hit success over the last years is El Gouna. Based on our experience we are also developing other integrated communities in premium locations such as Cairo and Makadi. The most prestigious development in recent times was the marina at Sahl Hashish.” Amin Serag.
“El Gouna, located 20km north
of Hurghada on a plot with an area of 39 million square metres, has grown over the past twenty years to become a totally self-contained resort community. Today, a number of similar projects are underway. 18km to the south of Hurghada is the new luxury resort of Sahl Hashish where the fi rst hotels and residential properties opened in 2007. With 41 million square metres of land, this will make Sahl Hashish the largest resort on the Red Sea. Across the Red Sea in Sharm El Sheikh, the new City Stars Resort is now under construction.” Peter Mitry.
Are there any problems with the general legal position / system in Egypt?
“Not really. Leases are renewable and some developers request 1 GBP to be paid after 99 years to get an extra 99 years. It is better for investors to buy leasehold in my opinion because that
What would be a typical buyer profi le?
“The market in Egypt has yet to attract many large corporate investors buying multiple units. Instead, the market mainly consists of individual buyers who are making lifestyle purchases or who are buying property as a small investment. The market in the Red Sea resort towns, particularly for long-term rentals is very buoyant, with yields of 7% to 12% possible. In terms of numbers, Russians are the most active in the market, although they want the cheapest properties. European buyers tend to have higher budgets and want to purchase on resorts with good amenities. A typical buyer in Hurghada would be a couple in their fi fties who are looking for a retirement home to spend the winter months in. A median purchase would be a one-bedroom apartment priced at £30k to £40k and paid for in cash.” Peter Mitry.
means they can buy as many units as they like. If you buy freehold, you are only allowed 2 units and you cannot sell them on for 5 years.” Tarek El Saadi.
“By law, it is not possible for overseas buyers to purchase property on a freehold basis in Sinai (which covers Sharm El Sheikh and Dahab). Instead it is only possible to purchase property on a maximum 99-year lease, although it is possible in some instances to renew the lease for relatively minor amounts. This does act as a disincentive to some buyers in Sharm El Sheikh. In Egypt, there are two ways of legally registering property. Under full registration, buyers are restricted from buying more than two properties inside the country and from selling within fi ve years of purchase. As a result, very few overseas buyers opt for this method of registration. Instead they register their property under the ‘signature validation court verdict’ method which does not restrict buyers as to the numbers of properties that they are able to own and allows the buyers to sell their property at any time.” Peter Mitry.
“Usually, investors look for
residential projects in Cairo where the appreciation in prices is very high. End users target second home areas like the Red Sea and Mediterranean coasts, Luxor and Aswan.
We fi nd that the majority of our buyers are a mix of Italians and Russians.”
Mohamed Abdel Wahab.
“90% of buyers are from Egypt, 10% from the GCC and the remaining 5% are from other markets. Although most of the property on both coasts has been snapped up by Egyptians, interest from GCC and overseas buyers is now very strong if they can make a payment and move straight in.” Peter Riddoch.
How would you describe the economic stability of Egypt? “Despite the fact that the number of overseas buyers dropped following the economic downturn, there has been little negative effect on the domestic market due to the fact that bank borrowing in the country is very low compared to Europe or the US. GDP in 2009 grew by 4.7%, making Egypt one of the Top 30 fastest growing economies last year, during a period when most Western economies were contracting. The Egyptian Pound is closely tied to the US Dollar. As a result, the EGP has increased in value by around 20% versus both the British Pound and the Euro over the past two years.” Peter Mitry.
“Very stable and a safe investment.” Tarek El Saadi.
“Egypt has been ranked one of the 10 least vulnerable developing countries to invest in. The government
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