APRIL 2011 |
www.opp.org.uk
HOTEL REPORT
Russians come back.” And, he added , when the tourists returned, sales activity would grow too. According to Mitry, “we’re not selling much at the moment, we’ve done some sales over the phone, but we normally sell to people when they come out for their holidays and no one is coming out at the moment.” “I think it could possibly
improve, but we need to get everyone back here. I think a lot of people are waiting to see what happens. We’ve had a revolution, and this country hasn’t governed itself for 30 years, so we’re waiting to see who comes forward.” Some believe that the property market will benefi t from the new regime, because it will be freed of government corruption. Wael Al Deeb of Haski Real Estate Development said: “Although the prices are lower now but we are optimistic. The old regime was corrupt.” “The next one will be different.
We’ll see more investors – corruption was stopping the big developers from coming to Egypt so the market will be more stable.” However, he added: “We’re not selling that much at the moment even though the prices in the market are stable. Material has become more expensive because of the revolution, but
developers haven’t raised their prices.” Tarek el Saadi of Sharm-el-Sheikh Real Estate has made 5 sales in the last month, down from around 15 a month normally. He told OPP: “There are two types
of buyers – those looking for a bargain, and those who just love Egypt.” “Egypt has a track record of bouncing back from times when tourism is affected,” says Orbit. “There have been various attacks … in 1997, 2004 and twice in 2005 in Luxor, Taba, Sharm El Sheikh and Cairo respectively.” “Each time the country’s tourism
fi gures went through a negative spike and have risen back to where they were shortly afterwards.”
“Even during the economic slowdown of 2008 when tourism was one of the sectors which suffered the most, the arrival fi gures at Hurghada Airport remained stable, dropping by only -0.02%.”
“Occupancy rates for the second half of 2009 were around the 80% mark in Hurghada, and it is worth bearing in mind that after the protests in major cities throughout Egypt there were no tourists harmed and the areas of Hurghada and Sharm El Sheikh remained unaffected.” However, Orbit can see that “within the immediate future, it is expected
that the RevPAR (revenue per available room) or profi t per room could decrease slightly as the hotels strive to create deals that tourists cannot resist.” But how will the uncertainty
affect the point of view of an international property investor looking at the company’s main Samra Bay Marina and Spa Resort development in Hurghada? “In terms of income,” Orbit told
OPP, “we can foresee that for the immediate future clients may prefer a rental income option whereby the
“Egypt is attracting a new breed of investor looking to invest long term in a stable economy”
completion date income is guaranteed by an international bank.”
“The income starts from July 2012 regardless of the development state. For the fi rst two years the client receives the income in Bank Bonded post-dated certifi cates.” “The remaining 6 years are contracted by the developer which retains half of the units at Samra Bay Marina & Spa Resort.”
And, “in terms of property prices,” the company adds, “there is a developer buyback option of 125% in place at the
EGYPT | 51
end of the 8 year rental period meaning that this will stand as a worst case scenario.” And the wider economic picture is improving too says Orbit. “Earlier this month, the overall growth rate in Egypt was predicted to fall from 6% down to 3.5% to 4%,” the company told OPP. “However, new fi gures show a
predicted growth rate of 4.3% … nearly 1% more than fi rst thought.” “This has not only added major
confi dence to the tourism sector, but improved confi dence among international investor in the Red Sea resorts.” Egypt played host to more than
14.7million tourists last year, up by 50% in 7 years despite setbacks like the Gulf War and terrorism during the same period. “Egypt is now attracting a new breed of sophisticated investor who is looking to invest long term in stable and growing economy,” says Orbit. So, although the political upheaval
in Egypt has thrown the property market into darkness, there appears to be a light at the end of the tunnel for the Red Sea resorts at least. Tourists are returning, and the
possibility of a new, young and idealistic government could help to bring transparency to an industry often dogged by corruption.
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