Egypt Property in the Red Sea Riviera

Country:  Egypt

Property buyers looking for sunny skies and seaside living at a fraction of the cost of other exotic destinations are finding that Egypt property ticks all the right boxes. The weather is good all year, the Red Sea Riviera provides not just fabulous landscapes and beachfront relaxation but some of the finest diving in the world, and the raft of new developments that have begun to appear in the past five years offer access to it all at much less than the price of similar properties on the Spanish costas or Portuguese Algarve.

The main focus of all this attention is Sharm el Sheikh, a popular holiday resort that is now attracting hundreds of buyers each year. Many of these have holidayed here several times and decide that, instead of forking out for accommodation each time they travel, they might as well own their own little piece of desert.

According to Naren Cox of property agency Churchill Innovative Solutions, Sharm el Sheikh is one of the top five destinations now for property buyers and an area about which the company gets a large volume of enquiries. He agrees that many people buy after they have visited a few times and says that part of the reason is the low prices, with average costs per square metre sitting at around £510.

"Most people are buying property in the resort of Sharm itself," he says. "Many developers have taken the successful model from Dubai and other resorts and are using the best design features and layouts." Cox adds that almost all of the Sharm el Sheikh property is in self-contained resorts that provide easy access to the Red Sea, along with extra facilities such as swimming pools, restaurants and bars on-site. In addition, most of the property on his books is waterfront or second line back from the sea, yet prices are what he calls 'realistic' with apartments measuring around 70 square metres costing from as little as £35,000.

"It's still early days in the Egyptian market and so it's the perfect time to get in at a good price," says Cox. "But that opportunity is going fast, as some developers are starting to put their prices up." He adds that many development companies are also offering rental guarantees of eight per cent with their properties. This is because they are pretty confident the market will do well in terms of tourism.

Cox says this is because people are prepared to go further afield these days and Egypt offers a low cost of living, value for money and a flight time of only four to five hours. Then, of course, there's the sun. "You're not going to get anywhere in Europe with year-round sun like you do in Egypt," says Cox. "In fact, the weather in most European countries can be pretty bad in winter."

Churchill is currently offering apartments in the Sunny Lakes complex in Naama Bay in the Sharm area from £27,000 for one bedroom. Prices climb from then on to £68,000 for a property in the Naama Bay resort complex; to £175,000 for an apartment in the pretty Melia Sharm resort; and as far as a whopping £350,000 for a luxury villa in the new Gold Sharm project.

For many, however, one of the big draws of Sharm el Sheikh is not just the popular tourist market, but the restrictions on building that will preserve the local area from overdevelopment. While this indicates there will eventually be a cap on property construction, it also means what is already built will, in theory, continue to appreciate, as there will soon be no further development allowed in the region. "Once the land's gone that's it," says Cox. "It will push prices up and buyers will have to look to other areas along the coast."

His concern is that, at the moment, access to those other areas isn't as good, with less flight connections and longer transfer times. One area that Churchill is involved with is Hurghada, another resort that is starting to develop along Sharm lines but without the high level of infrastructure that the more established resort currently has. Even so, like Sharm, Hurghada property has seen capital appreciation of around 20 per cent in the past year, so those who are interested may well find prices climbing out of their range if they hang around too long before buying.

It's true to say, though, that not all developments in the region have seen such increases. It really depends on the quality of the resort and facilities on offer, and anyone buying is well advised to choose a development backed by a UK company with a list of traceable credentials.

One scam to look out for is the supposed sale of 'freehold' land for building on. Under Egyptian law you can't own freehold in Sharm, only on a 99-year lease, so if anyone promises you freehold ownership in the resort or tries to sell you land they are probably trying to con you.

In Hurghada, however, you can own freehold and this is one reason buyers are drifting this way. And with prices in some resorts still sitting at around £40,000, you can't blame the bargain hunters. However, as Cox says, with less easy travel connections it could be a while before the still-developing resort has the cachet of its more popular Red Sea neighbour.

Ian Cunningham of Escapes 2 agrees that Hurghada is one for early investors. He says that the resort has risen in price by up to 50 per cent in the past two years, and with a proposed (but not definite) new airport in 2010 this is only set to increase opportunities there. According to Cunningham property prices in Hurghada start at an average of around £50,000 and go up to around £80,000 for something near the beach. As is the case with Sharm, a lot of buyers Cunningham is seeing are hoping to spend part of their year in the area after having fallen in love with it while on holiday.

He explains that though there has been some disquiet about the number of resort developments in the area, many people prefer to buy into something offering a high level of quality facilities. He feels that new owners aren't necessarily ready for what he terms "the real Egypt" but that owning in a resort gives them access to local culture while living in a development in which they feel comfortable. In addition, the choice has been somewhat made for buyers, as non-nationals are only allowed to own in designated areas anyway.

In Hurghada, Escapes 2 offers property starting at just under £40,000 for a one-bedroom, going up to £142,000 for a penthouse on a resort such as the popular Sahl Hasheesh, which is already selling well. This particular development will be an extraordinary project in that it offers the amenities of an entire town, with a port, schools and hospitals in addition to all of the usual holiday resort facilities. Also planned is a sunken city for divers to explore, a Pyramids miniature theme park and a casino.

Far from being seen as a kind of bargain-basement type of destination, however, the Red Sea Riviera is starting to attract substantially upmarket resorts. Serrenia is one such development, aimed at those who want the best money can buy. The futuristic design of the properties at Serrenia are the creation of Sir Norman Foster's architectural team and the aim was to emulate the sweeping natural curves seen in the surrounding desert dunes.

Situated near Hurghada , on its own beach, there will be a choice of beautifully designed and decorated apartments, waterfront villas and golf villas measuring from 150 square metres and costing from £190,000 to individual villas and luxury palaces, each built on their own private island and priced up to £17.5 million.

The entire complex will be designed for self-contained living, with 24-hour concierge services, retail areas, a seven-star hotel, outdoor leisure facilities, championship golf course, a top-end spa and a marina. There will also be access to charter flight and yacht services and a helipad.

The expectation is that Serrenia will redefine what it is to own by the Red Sea and bring in a whole new type of buyer - one that is moving away from any notion of cheap and cheerful. Certainly Homi Mullan of Vantage, the developer behind the resort, thinks Egypt has proved it is the right location for such a property.

"In some respects Egypt really chose itself," says Mullan. "It has some spectacular features. The climate is comfortable year-round; it's convenient for travelling from Europe and is within an hour of the great cultural destinations of the Pyramids, Petra and Luxor. Plus it offers the best diving in the northern hemisphere."

When asked to compare prices at Serrenia with other resorts in the local area he admits there is a vast difference, but believes it is justified by the level and quality of what his resort offers in comparison to others. "Serrenia is very high end. You can't buy into it for £50,000 but it's not necessarily expensive for what it represents."

At the other end of the scale and in another area of interest to second-home buyers is Zaffarana , much further north than Hurghada though still on the Red Sea. The resort is self-contained and is being sold from as little as £20,000 for a one-bedroom apartment and £27,000 for two bedrooms. Cunningham, who is selling the resort, says the developer is a credible Dutch company and reiterates how important it is to know the reputation of the builder.

The property here is cheap because access is more difficult than other Egyptian resorts and in terms of nightlife and culture there isn't as much variety. However, there are a lot of on-site facilities including a diving centre and marina, private beach and reef, mini golf, tennis courts and even its own medical centre. So if you simply want somewhere affordable to pop to that offers sunshine and relaxation you could find it suits your needs perfectly. Apartments come with a guaranteed rental of ten per cent per annum, which is higher than Hurghada where you're looking at nearer to five to eight per cent on an average occupancy of 50 to 70 per cent through the year.

"Pricewise, Egypt is far better than a lot of more mature holiday markets such as Spain and Portugal or the Caribbean," says Cunningham, "plus it's a lot closer than comparably priced markets such as Brazil."

Cunningham also dismisses fears that recent terrorist attacks in Sharm el Sheikh might put buyers off. "Most people have got to get on with life and Egypt doesn't have any greater problems than any other country," he says. "We've seen attacks in Spain, London and Morocco recently and it hasn't stopped people travelling. It does create shockwaves but foreign investment in Egypt property is so important the government is doing all it can to protect it.
 

First published in September 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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