Egypt Property Take Buyers by Storm

Country:  Egypt

The Pyramids may be Egypt's best-known icon but there is a lot more to this north African state to be discovered and prospective Egypt property buyers are arriving in their droves intending to do just that.

The country might have had its fair share of problems recently with a wave of terrorist attacks hitting the popular Red Sea resort areas but, after a short-term drop in visitor numbers, figures are now back up and that goes for investors as much as holidaymakers. This is probably because it's hard for us Brits to stay away from a country that offers year-round sun and high temperatures, exotic culture and history, as well as a wealth of natural and man-made wonders.

According to local agents, the recent problems haven't dented property sales much either. Sajjad Aslam of City & Urban says that sales are continuing to rise in several of the Red Sea resorts, especially in ever-popular Sharm el Sheikh. "It hasn't put people off, in fact we're busier than ever," he says. Prices of property in Sharm el Sheikh  have leapt considerably in the past year with, according to Aslam, many buyers seeing a profit of 100 per cent on their purchase.

He puts the surge in prices and interest down to the fact that the government has levied restrictions on building plots in and around the Sharm area, which in time will limit how much property can be built. People sitting on land who have applied for building licences have only a short time now in which to develop it or risk it being reclaimed from them. This is partly to stop speculation and partly to ensure that the resort is finished and the cranes can move out. The knock on effect, however, will be that within a few years there will be no more new property either, so lots of investors are trying to get in on the act while they still can. "It's only a matter of time before there'll be no new development," says Aslam, "and that will push up prices."

Red Sea Riviera property is remarkably cheap by UK and most European standards, considering much of it is beachfront. It's possible to buy a one-bedroom apartment from around £30,000, with a two-bedroom example going from upwards of around £40,000, depending on location. Properties on City & Urban's books range from apartments in a new resort near Naama Bay priced from £24,000, to two-bedroom apartments priced from £52,500 and a resale, split-level property with terrace, close to the beach for £25,000. For those with a larger budget there are new and resale four-bedroom houses priced from £80,000 and large, luxury detached villas from £150,000.

Aslam says resale apartments can also be found at reasonable prices in popular resorts such as Hurghada, which is less well developed than Sharm, with a one-bedroom property in Hurghada  from around £25,000. He adds that he doesn't see any reason why people would need to pay more than around £70,000 for a decent-size holiday home "unless it is directly on the beach" and cites an example of villas in a luxury five-star hotel resort that are currently retailing at £160,000 - but this is because they offer access to the resort's upmarket facilities and prime rental possibilities.

Jennette Bradbury of Egyptian Experience agrees that interest in Sharm el Sheikh is at an all-time high, with property selling well, and this effect is rippling out to other areas. "Sharm el Sheikh is still the number one spot for property investors followed by Hurghada," she says, " and Marsa Alam is just starting to take off."

Bradbury also claims that prices in Sharm start at around the £30,000 to £40,000 mark but says that those looking for four-bedroom properties should expect to pay from around £90,000 for something "only a ten-minute walk from beautiful beaches and clear blue seas". She has property on her books in Naqb Bay in Sharm starting at less than £20,000, as well as a range of two- and three-bedroom apartments priced from £37,000 to around £50,000.

Like Sajjad Aslam, who puts rental returns at around 10 per cent per annum, Jennette Bradbury sees the property rental market remaining strong for the future, with more resort developments underway and lots of tourists keen to experience the Red Sea's great diving, good weather and breathtaking desert landscapes. "With sun year-round and the Red Sea Riviera starting to be known as a winter resort, annual rental potential is 52 weeks," she says. "You should anticipate getting £250 a week for a fully-furnished two-bedroom apartment for holiday lets and if you were to rent it to the local people in the tourist industry you could get £375 per month for a one-year let, which is quite a good return on £37,000."

Much of the area around Sharm and Hurghada has become increasingly well developed in terms of air transport, roads and amenities such as hospitals and leisure pursuits over the years. There are a large number of charter and scheduled flights heading for Sharm's international airport right through the year and almost all the big name hotels and restaurant chains are represented in the resort. Quieter Naqb Bay is seeing more development now and there are plans for a golf course that, thanks to the great weather, will be in a position to attract winter golfers. For those who want to get in at ground level and buy into an area that is still in its infancy, however, Marsa Alam has been identified as one place to investigate.

Still quite quiet and underdeveloped, most of the building plots have been bought by developers who will undoubtedly be moving into the resort in the next few years. Sajjad Aslam says that Marsa Alam is more popular with divers now, due to having better sea life and coral than Sharm. There are now direct flights into the area, though fewer than to Sharm, and several big name hotels have opened. Aslam confidently predicts it as "the next big thing" and has property in Marsa Alam from £28,000 for apartments overlooking the beach. Egyptian Experience also has property for sale there, starting at £75,000 for a one-bedroom property and rising to £370,000 for a four-bedroom villa.

Churchill Overseas' Naren Cox claims that the Egyptian market is very buoyant at present with people buying property with the aim of renting it to the increasing numbers of tourists. His current properties include one-bedroom homes in Hurghada and the popular location of Zafarana from £20,000, moving up to £37,000 for a property in Sharm.

Cox claims that rental can bring in a yield of between five and ten per cent depending on where the property is and how it is marketed. He says that the highest returns are to be found in residential resorts featuring an on-site hotel through which properties are managed and let, while renting your property yourself would bring in a more varied income because renting would possibly be less reliable through the year. You would also still have to pay management and maintenance costs to a local company or hotel. Alternatively, there is a market for long-term rentals from those trying to escape the British winter and Cox predicts you could rent for around £200 per month.

Buying property in Egypt is relatively straightforward, though you are advised to ensure your lawyer checks out all deeds and the developer's building licenses before purchase. However, the government recently introduced a law stopping foreigners from owning land in certain areas such as Sharm el Sheikh (but bizarrely not Hurghada) on a freehold basis. This means that overseas investors only have the option of owning on a 99-year lease and that goes for even those who bought before the law was introduced. It apparently hasn't put people off but it is something to consider if you plan on handing it down to your heirs.

Jackie Rendell from Wellingborough loves the Red Sea area and can't wait to move into her own property in Naqb Bay in April. She bought her two-bedroom, sea-facing apartment there when she realised that her habit of taking four holidays a year to Egypt made it cost effective to own. She loves the location for it's year-round good weather but also because "within a short plane ride you have the beach and the mountains, and a diverse culture that's very different from Britain." Rendell bought her flat for £55,000 and plans to rent it out for an estimated £200 per week. Though she admits it may be hard to let other people enjoy her property when she longs to be there so much herself, so a second apartment may be on the cards. "Buying another place is always in the back of my mind," she says, "if the right thing came up I'd go to look at it like a shot."

For those who would rather have the vibe of an exotic city location, Cairo is possibly one of the most exciting places to buy. The Pyramids are obviously the big attraction here but people are also drawn to the bustling streets and business opportunities. It isn't easy to find historic property in Cairo for sale and, according to Jennette Bradbury of Egyptian Experience, foreign investors would probably not be interested in the standards of accommodation offered by much of the older property, so new-build is often the best option. Having said that, Egyptian Experience does have a beautiful 1930s' villa on its books, situated in the Heliopolis area of the city for £1.5m.

There are areas just outside the main city (known as New Cairo) where developments are going up quickly and where prices are averaging £40,000 to £60,000 for standard apartments and from around £100,000 for three-bedroom villas in gated communities, but older property can be found for as little as £15,000. Like Jennette Bradbury, Sajjad Aslam says that there are a lot of run down apartment blocks in the city and this is where you'll find the cheaper places. He adds that, if you have the mind to take on a renovation project, such properties "have potential".

Aslam claims appreciation is currently around 10 to 15 per cent in the city and that the rental market is buoyant, which is why he has so many buyers looking to own there. He goes on to say that a lot of development companies are moving in from Dubai and targeting the multi-national staff of overseas companies, which offers both a good sales and rental market, with buy-to-let property pulling in an average of around £400 per month for an apartment measuring 80 square metres. It's usually safe to say that where big business goes the smaller investor might be wise to follow and this may well be the case in Cairo. "Egypt is somewhere developers can see there's still a gap in the market," says Aslam.

Buying property in Egypt

• Foreign nationals are restricted by law to owning only two properties at any one time and these must not be larger than 4,000 square metres in size
• It's tricky in Egypt to confirm legal ownership of title deeds or that the property is properly registered and is clean of any mortgages or other debts. No one ever knows for sure who owns what and it's estimated that a great deal of building is illegal. This is a situation the government is working to resolve but it may take some time. If you want to own here it is probably safer to buy through a reputable developer or in a well-known and established resort
• Make sure your lawyer is bilingual and is familiar with Egyptian property law, search procedures and sales negotiations
• Once an offer is put forward it is usual to reserve the property with a negotiable deposit. Contracts of sale are then drawn up while your legal adviser performs all the necessary searches
• Once the sale has been completed and all contracts signed, the property must be registered with the local real estate department and the public notary. A fee of three per cent of the value of the property is required to be paid on registering the purchase. There is also an annual real estate tax that varies depending on location and standard of the Egypt property. Make sure your vendor is up to date on any tax due before the sale goes through or you'll pick up the tab for his portion too.

First published in February 2007.
Some information contained within this article may have changed since it was first published. Homes Overseas strongly advises you to seek current legal and financial advise from a qualified professional.

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