A Guide to Property in Egypt

Situated in north Africa, Egypt is bordered by Libya, Sudan and Israel although the country is also surrounded by both the Mediterranean Sea and Red Sea. The country has a land area in excess of 1 million km2, and a population of over 77 million people. Egypt is packed with more history, culture and places to visit than many countries of the world put together. Dominated by the ancient Egyptians the country has for some time been a powerful magnet for tourists, with sites such as the Pyramids, various Pharaoh tombs and the Great Spinx proving popular attractions.

Introduction To Egypt

For a country situated in the hot bed of the Middle East, Egypt has a very steady and proven political system in place, having been officially recognised as a republic since 1953. On the downside, the average turnout for the various elections held in the country has only been around the 25% level, with many of the population still wary about the spectre of democracy. There have been moves to amend and adapt the electoral system, allowing voters to choose a direct leader, as well as ruling party, but these have yet to have a real impact.

Egypt offers a fascinating mix of modern living standards while keeping a firm focus on the history of the country, it is easy to move between the two time periods in a very short distance, something which has attracted both tourists and overseas businesses in their droves. The country has a very hot and humid climate, which has resulted in over 99% of the population living in less than 6% of the country's land mass - mostly concentrated along the Nile valley.

Property Market in Egypt

While the Egyptian property market offers good potential for sustained long term growth, historically it has been effected my unrest in the region and more recently the terrorist threat in and around Egypt. The year 2005 saw a very difficult property market as local and regional unrest had a knock on effect to all property markets in the area, however this recessionary period came to a close in 2006. This was as much as a result of an increased emphasis on the tourism industry as it was on a pick up in the economy.

When considering all of the property markets of the world, Egypt does offer many unique and mysterious attractions which have been the centre of much interest for years. In comparison to European property markets, Egyptian property is substantially cheaper in relative terms. While the unrest in the area can often attract much headline news, it seems that the fear of terrorism in the area is having less and less of an effect on investors - who have strangely been able to come to terms with the ongoing threat.

The coastal regions of the Red Sea and Mediterranean Sea have created their very own property “bubbles” with investors taking advantage of the climate, the constant flow of visitors as well as the value for money which is very evident.

There have been recent signs that the Egyptian economy is set for a prosperous period, with many of the so called building blocks already in place. The authorities have hinted at their intention to further develop a free market economy, which is a major attraction for overseas investors. Slowly but surely the country is growing in stature and the economy appears well set for the future.

Buying Property in Egypt

The last few years have seen a major sea change in the policy of the ruling authorities towards overseas and expat investment in the country’s property market. Many of the earlier restrictive laws have either been amended or removed as Egypt continues to invest in the future, and ensure a constant flow of overseas investment.

The government have actually been actively promoting the property market to overseas investors, highlighting their thoughts and hopes for the future. Unfortunately the fee structure and property register in Egypt is massively out of date, with many suggesting that only 10% of the country’s properties are actually registered.

The process and cost structure when buying a property in the country is very different compared to other countries. It is even more essential that local lawyers and property experts are employed to act on your behalf as registration issues can add massive delays and increased costs to any purchase. Until recently Property Registration fees where in the region of 12% of the property value (perhaps a reason why so few properties were registered) although this has now been reduced to 3%.

Once a property purchase has been agreed in principal the buyer will be expected to put down a deposit in the region of 10%, and soon after, forward evidence that they have the necessary funding in place to cover the balance. There are many grave risks to property investment in Egypt, and while the potential for substantial growth in property prices is sizeable (especially in the coastal regions), all buyers should proceed with care and ensure all due diligence is in place prior to completion.

Future Property Market

While many experts are predicting property price growth in the region of 15% per annum for the foreseeable future, there are some economical risks to consider. However, if the authorities continue to encourage overseas investment in all areas of the economy, and are able to stimulate and nurture local activity, the future looks very rosy indeed.

On a more general note it has to be said that few places in the world can offer the beauty and culture which is connected with Egypt. The Pyramids are renowned the world over, as is the culture and history of this ancient land, something which the authorities only recently seem to have realised the value of. Expect to see an increase in tourist activity over the next few years, and a probable increase in the number of expats looking to relocate to the region.

While there are no guarantees in the often volatile area in which Egypt is located, there are signs that countries in the region are interested in adapting their laws and processes to encourage western style economic reforms. If they carry out their intentions, then the authorities have the potential to change the financial landscape of the country for many years to come.

For more information why not visit the Interhousing Expo? The next big property event in Egpyt is being held in Hurghada, 4 - 6 January 2009.

Source reference: Totally Property / Lincom Realestate