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17.04.09 - A special report by Ian Marsh of ‘Think-Egypt’

A political & economic overview

 

Egypt has assumed the role of peace-maker within the Middle East with real enthusiasm. Indeed as the most populous nation in the region, Egypt has a clear strategy in place to ensure it continues to play a prominent role on the ‘world stage’.

 

The President has taken the lead in relation to the latter and has overseen the foundations of a modern democratic state in Egypt. The Government is competently led by HE Nazif and is made up of a number of very successful ex-businessmen.

 

This has created an extremely attractive environment for investment: the main political parties are in broad agreement that attracting international capital is essential to Egypt’s on-going modernisation. In 2007 Egypt’s economy once again performed extremely well: markets exceeded double digit growth for the second year running.

 

It is interesting to note that Egypt, located in a region which is considered as being relatively unstable (the Middle East), has not been involved in any type of conflict for over thirty years.

 

Egypt’s reputation for very low crime rates is one of the reasons that the tourist industry has grown rapidly. Tourism is already Egypt’s biggest earner of foreign currency and growth in the industry is expected to accelerate still higher from the current year-on-year rate of 8%. The number of British tourists exceeded 1 million in 2007, with over 25% returning for at least a second visit or more.

 

Rental market opportunities for foreign investors.

 

The property rental market in Egypt has historically been restricted to local demand.

 

With rising inward investment, the growth of new universities and other educational establishments, and the influx of international workers, the property rental market in Egypt has grown exponentially.

 

However the historical lack of high quality accommodation has given rise to opportunities which are slowly being exploited through the construction of new developments across the country.

 

The leisure and entertainment industry is fuelling demand for rental accommodation, especially in the main tourist destinations (where buy-to-let investors have been buying property to hold or to ‘flip’). As mentioned above the arrival of professionals from abroad is placing acute pressure on supply. This is particularly pronounced at the current time since there are simply too few rental properties in the key regions: developers cannot ‘keep-up’ with the pace of demand.

 

 In particular, the hotel industry has expanded extremely rapidly, which has attracted a large pool of skilled and experienced foreign personnel. Such workers command high rates of pay, and as stated above given the dearth of high quality rental accommodation, their influx causes inflation in local rental prices.

 

Additionally the advent of the ‘apart-hotel’ concept has seen an increase in the construction of units for foreign owners (who often rent their property back to the hotel). This is creating a robust market for second home buyers to exploit.

 

The secondary property market in Egypt.

 

Egypt is an expansive country with over 2,000km of coast line and an internal area that is hitherto in large parts undeveloped.

 

Egypt does not therefore suffer a shortage of land on which to build; rather, it is the historical absence of external investors which has seen the supply of new property stay fairly steady in recent history.

 

However, over the last two years the numbers of properties sold to foreign buyers has steadily increased, and in 2008 is expected to exceed 10,000 units. This increase reflects demand from a truly international investor base.

 

Construction standards and styles are increasingly meeting, if not exceeding, international requirements. This in itself fuels demand as investors recognise that rising standards mean they can attract a higher yielding tenant.

 

Many new developments are scheduled to be built over the next 4/5 years. Although capacity is significant, demand is currently outstripping supply and the secondary market is also expanding extremely rapidly.

 

 Security of investment within Egypt

 

Egypt is experiencing growth in inward investment from around the world, with huge sums of money directed at infrastructure, housing, and commercial/industrial premises. International financial institutions have therefore judged that investing in Egypt is sound.

 

Egypt’s banking industry has adopted international protocols required to enable them to trade with all external markets and to work to new compliance and accreditation standards as set out for all such international banking institutions.

 

Private home buyers can own property freehold, with a 10 year construction guarantee.

 

Access to funds for inward and external purposes

 

Exit strategy for owners and investors.

 

The Government has expressly stated its desire to attract property investors in Egypt, and has created a tax environment to precipitate investment. There are no income, inheritance or capital gains taxes for foreign nationals investing in Egyptian real estate (foreign owners should be aware of their responsibilities within the tax regimes in which they are domiciled).

 

Indeed, the process for transferring funds into and out of Egypt for foreign investors has been dramatically streamlined in the last couple of years.

 

The current rules facilitate swift transfers of funds and allow owners to buy and sell property freely.

 

For more complex investments, including off shore personal and institutional investments, Government agencies work closely with the main parties involved, reflecting Egypt’s commitment to attracting foreign capital.

 

Competitive position of Egypt in the international property markets.

 

COUNTRY OVERVIEW

 

<!--[if !supportLists]-->·         <!--[endif]-->INTERNATIONAL HOTELS TO WORLD CLASS STANDARDS

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<!--[if !supportLists]-->·         <!--[endif]-->ENGLISH SPOKEN THROUGHOUT THE COUNTRY

 

WHY NOW?

 

 

Why Egypt?

The drive to introduce inward investment and to enter into Joint Ventures with foreign investors and companies is giving rise to wide-ranging negotiations not only with UK and Europe but also with Middle Eastern consortia, and increasingly with Russia and some of her former states.

The Government is wholly supportive of these initiatives and is committed to attracting investment from foreign individuals and companies alike.

There are many tax advantages and incentives for investors.

Safe Country

City Living

Culture

Alcohol – Under Control

Freehold ownership

Places to go & things to do

Popular destination

Community concepts

Flight times

Food

Friendly people

Housing inexpensive

Location

Real History

Superb choice of resorts

Sand

Sea Diving

Value for money

World Heritage sites

Modern Services & goods

Shopping

Space

Taxation advantages

Traditional way of life

Modern Airports

Modern Facilities

 

Which are the key destinations in Egypt for investors?

 

The most popular destinations are those with good domestic and international access.

 

Currently there are over 35 airlines carriers operating in Egypt with a focus on Cairo, Sharm El-Sheikh and Hurghada.

 

There are many more carriers observing developments and we have no doubt that as property ownership grows so will the number of flights to and from Egypt. This has been the case in Eastern Europe in recent years and we feel that more exotic destinations, such as Egypt, are next in line for improved affordable air travel.

 

In order of priority we have listed below the key areas to consider investing in property.

 

In all cases you can get to Egypt in around 4.5 hours direct from the UK, and 5 hours flying indirect using a selection of European and Intercontinental airlines.

As far as prices are concerned expect to pay around £150-£250 GBP return, depending on the season.

 

•Sharm El-Sheikh

•Hurghada

•Marsalam

•North West Coast

•Alexandria

•El Alamein

•Dahab

•Ain Sokhna

•Cairo

•Luxor

•Aswan

 Egypt- The destination of choice.


We would like to welcome you to Egypt, a peaceful country embracing the twenty first century, but with a reputation as the ‘seat of history’. Egypt is replete with rich culture, world class ancient monuments and historical significance.

 

We continue to see an increasing number of tourists visiting Egypt which allied to a consistently high hotel occupancy rate, indicates that Egypt is fast becoming a ‘destination of choice’ for the international traveller.

 

 

Egypt is experiencing a number of positive developments, from increasing public sector efficiencies, the introduction of state-of-the-art technology into all aspects of life, and the rolling-out of social development programmes.

 

Egypt is now entering the second phase of its economic reform programme. The emphasis is on privatisation, raising productivity and increasing exports, applying new technology, improving health care, creating new jobs, and reforming the education system.

 

The education system continues to attract students from around the world.

 

The recent initiative by one of Egypt’s leading businessmen with respect to building a new British Egyptian University in Cairo demonstrates Egypt’s growing standing in the world of international academia.
 

‘Residential tourism’ is introducing Egypt to an entirely new universe of investors, whose interest is fundamentally financial return, but who are also bearing in mind other considerations. Owning a property in Egypt, with its ancient sites, fast-improving infrastructure, very low crime rates, and superb beach and diving resorts is comparable to few other places on the planet.

 

The fact that build standards are so high and prices are so affordable means that Egyptian real estate is currently viable and within most investors’ reach.

 

Indeed, given Egypt’s dedication to an international role encouraging peace in the region, its commitment to modernising its economy, political reform, and attracting foreign capital, an investment made in Egypt now could yield spectacular returns in the not too distant future.

 

We do hope that you will take the earliest opportunity to visit this beautiful country, and to experience first hand what it has to offer, be it a short trip, a holiday home, or perhaps even retirement.

 

Egypt has something for everyone.

 

 

The commitment

 

Egypt is embracing the residential tourism market with a great deal of enthusiasm and commitment.

 

The government has changed many of the laws and regulations to specifically attract the foreign investor to Egypt

This high level of commitment is demonstrative of the seriousness of Egypt to attract investment to the country, and in particular their intent to develop and expand residential tourisms.

The key Government offices - the Ministry of Tourism, Ministry of Investment and Ministry of Housing - are working in unison to attract foreign investors.


Egypt has something for everyone, and at a price for everyone