Investment Prospects in North Africa Property
Country: Egypt; Egypt; Morocco; Tunisia
With the European and US property markets generally sluggish and the UK pound currently at an historic low against the euro, the cost of buying a property in the eurozone has increased considerably this year.
Consequently, an increasing number of property investors and holiday property owners are now looking further afield to emerging property markets in destinations such Morocco, Tunisia and Egypt, where property prices remain cheap, and the prospects for higher property returns are greater. Property in MoroccoLocated just three and a half hours flying time from the UK in the north western corner of Africa, Morocco's close proximity to Europe - along with its warm Mediterranean climate and relatively low property prices - has turned Morocco into a hotspot for foreign property investors.
"British demand for Morocco property has fallen of late in light of the UK's economic problems. Nevertheless, there's still strong international demand coming from other international property investors, particularly the Middle East, France and USA," says Michael Kent of Moroccan Sands.
Foreign demand for Moroccan properties is being largely driven by rapidly growing tourism levels, which is resulting in significant year-on-year capital growth of around 15 to 20 per cent. Yet property prices remain considerably cheaper than nearby European destinations, Spain and Portugal. Tourism is being fuelled by Morocco's forward-thinking King Mohammed VI decision to develop an ambitious tourism strategy 'Vision 2010' six years ago, with the intention of increasing tourism in Morocco from 2.2 million visitors in 2002 to ten million by 2010. His target has so far been aided by the introduction of a greater number of international airlines, including a range of low-budget carriers. Alex Andjel of Bridgehouse International says: "Annual tourism figures have already leaped by 60 per cent from four million in 2003 to 6.5 million in 2006, and 7.5 million for 2007."
Consequently, Morocco's economy is growing ever more dependent on tourism, which is set to account for around 20 per cent of the gross domestic product (GDP) by 2010, generating an additional 600,000 jobs in the process.
The King's vision is also radically improving Morocco's standards of infrastructure and tourism facilities. Miles of coastline, urban locations and infrastructure are being dramatically transformed at a cost of around £7.5 billion, in an attempt to strengthen the economy and attract more foreign investment.
Plans within 'Vision 2010' also include the construction of the Gibraltar tunnel, which is currently at the due diligence stage. The idea of the tunnel, first thought up in the 1980s, is to link Morocco, across the Straits of Gibralter, to Spain.
Robert Shaw of Morocco Properties says: "The King's vision is dramatically improving Morocco's standards of infrastructure and tourism facilities, which is having a positive impact on most Morocco property investments that are, particuarly within the Plan Azur, a component of Vision 2010."
Despite plans to construct thousands of new properties across the country, there are few fears of an oversupply. This is largely because "developments will conform to strict environmental controls meaning that the over-development seen in places such as Spain should not be a problem," says Andjel.
Some of the greatest price growth has been recorded for Marrakech property and Saidia property, which are typically the most popular places to buy property in Morocco, attracting many celebrities in the process, according to Kent.
However, the greatest room for capital appreciation moving forward are in emerging destinations such as Tangier, Agadir and Essoauira, according to Shaw. He adds: "The prospects for capital growth are far greater, because property prices, which generally start from around £50,000, are much cheaper compared to Marakesh and Saidia."
Buy-to-let investors buying property in Morocco, should however, look no further than Marrakech where an average yield of 7.66 per cent is currently achievable, according to the latest global buy-to-let property index compiled by property research group, Global Property Guide. Mortgages of 60 to 70 per cent loan-to-value are currently available to overseas nationals. Egypt PropertySteeped in history and culture, demand for property in Egypt to both buy and rent is rising, on the back of booming tourism levels.
Research conducted by the United Nations' World Tourism Organisation (UNWTO) reveals that tourism figures in Egypt grew by 20 per cent in 2007, as part of the Egyptian Tourist Authority's aim to increase the country's visitor numbers to 16 million by 2014. Marion Isom of La Siesta Tourism and Real Estate Services said: "This is excellent news for the buy-to-let market. Tourism figures always have an effect on the property market of a region and this rapid growth in interest in this amazing country is a welcome step forward." The greatest Egyptian rental returns can currently be found in the capital of Cairo - 11.35 per cent - the second highest in the world, according to the Global Property Guide. Egypt's property market is described as one of two halves, by Stephen Smith, Sales and Marketing Director of West Side Village. He says: "There are the more established cities of Cairo and Alexandria where property prices are higher and growth is slowing, and the newly emerging areas such as Hurghada, which are aimed at the tourist market and have huge potential for capital appreciation."
It's reported that average Egypt property prices are growing at an annual rate of around 15 per cent. Nevertheless, it's still possible to buy a new-build property in Sharm el Sheik for around £30,000, and along the Red Sea for under £50,000. The property boom is reflected in the fact that the country's mortgage market is expected to double in the next year, according to the Mortgage Finance Authority. There are now seven dedicated companies and 14 banks supplying much needed finance to the market, with a maximum 80 per cent loan-to-value mortgage available to foreigners. Osama Saleh, chairman of the Egyptian Mortgage Finance Authority, says: "In light of ongoing hikes in prices of raw material and dwellings, mortgage finance has become the only answer to Egypt's housing problems." The ability to borrow money to buy property in Egypt is expected to attract even more international property buyers, who now have an opportunity to use the banks money in order to maximise their own property investment return, with a lower cash deposit required. The positive activity in Egypt's mortgage market is pretty much in line with the country's economic growth, which remains largely unaffected by the global credit crunch. Foreign direct investment in Egypt reached 8.2 per cent in 2006/2007, according to the Institute of International Finance (IIF), up from 0.5 per cent of GDP in 2004/2005, while inflation and unemployment stand at around 11 per cent and 9.1 per cent, respectively. Egypt's tax friendly laws are also appealing to foreign second homeowners, as the country doesn't charge non-resident property owners in Egypt any tax whatsoever, in an attempt to encourage greater investment from overseas property buyers. Matt Glazier, head of Winkworth International Developments, comments: "Foreign investors are well regarded by the government and as such property laws are more streamlined than other territories making the buying process even simpler." Property in TunisiaShe may be the smallest of the nations situated along the Atlas mountain range, but Tunisia's property market is set to make a big impact. Deemed one of the more liberal Arabic nations, there is a range of international airports and inexpensive operators fly there frequently. Perhaps strange, then, that it hasn't featured so heavily on the property spectrum. However, this was largely because foreigners were, until recently, restricted from buying property in Tunisia, in order to prevent locals being priced out of the housing market. Consequently, around 80 per cent of all Tunisians are now homeowners, according to Samuel Mond, GEM Estate's Tunisia expert. And while western Europe buckles under the grip of the credit crunch, the economy in Tunisia appears encouraging, with the International Monitory Fund predicting 5.9 per cent growth for 2009. The currency (dinar) is stable and inflation is low. The tourist market is booming, with the World Travel and Tourism Council forecasting an annual increase of 4.3 per cent between 2009 and 2018, and yet Tunisia property prices are still as low as they were for Morocco property five years ago. Too good to be true? Mike O'Riordan, international sales manager at Propertyshowrooms.com says:
"Compared to many other tourist and property investment areas, Tunisia is still performing very well. Last year the economy grew by 6.3 per cent. This has been partly fuelled and sustained by continued interest in property from buyers and investors from other Arab nations. Although we've noticed a marked reduction in interest from European buyers." O'Riordan reports that demand is greatest for Mediterranean coastal residential developments. He says that the average price of a new property in Tunisia is currently appreciating at around nine per cent year-on-year, while an annual rental yield of approximately 5.6 per cent is achievable. The presence of major Middle Eastern property investors, mainly from Dubai and other UAE nations, are really adding fuel to the Tunisia property fire. A couple of years ago Emaar announced a plan to develop a £1.1 billion marina project on the eastern coast, and the Mediterranean Gate. Century City and Tunis Sports City will bring further golf courses and marinas, world-class sporting academies, Olympic grade facilities, business and leisure hubs as well as thousands of residential units. Steve Worboys, managing director of Experience International, comments that the north east of Tunisia is very popular due to its excellent infrastructure and beautiful beaches. He adds: "Expected rental returns are currently looking at around ten to 12 per cent - even higher in some cases. A rental management company is often appointed to cover any rental return needs. Capital appreciation is estimated at around 20 to 30 per cent depending on the location." This may be an exceedingly optimistic approximation in today's property climate, nevertheless Tunisia is coming up trumps as a hot spot for both second homeowners and investors.
First published in December 2008.
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.
Marc Da-Silva and Nicole Rapaport
There's also a range of articles for you to read about buying property in Egypt:
As well as our overseas news stories affecting the property market in Egypt .
Or view our range of property for sale in Egypt.
See Also: Egypt, Morocco, Tunisia
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.
Some properties in Egypt
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Price: £17,000
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Type: Studio, Apartment
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Bedrooms: 1,2,3
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Pyramids Beach is the perfect choice of development for anyone on a budget who is looking for affordable seaviews and beach access, plus all of the facitlities one would expect from a high class resort.
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Price: £20,000
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Type: Studio
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Khamsin Beach Resort is a luxury collection of waterside apartments located in the Arabia District of Hurghada just 10 minutes from the bustling tourist hotspot of Sheraton Road, Downtown Hurghada.
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Price: 20,800 GBP
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Type: Studio
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Bedrooms: 1
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ORIENTAL COAST lies 36 km north of Marsa Alam Airport, 180 km south of Hurghada and 200 km from historical Luxor (all cities do have International airports).
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Price: £22,000
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Type: Studio Apartment
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Regency Continental is another exciting development from the people who brought Regency Towers and Regency Beach to Hurghada.
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Price: £22,000
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Type: Studio
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Bedrooms: 1
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West Side Village has 686 studios, 1 & 2 bedroom apartments set in over 44,000m2 of tropical landscaped grounds with its own restaurants, cafés and bars, health & beauty centre, 3 communal swimming pools and tennis courts.
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Price: £25,000
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Type: Studio Apartment
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Kamareia Resort is a luxurious, new, low-density development that is being built in one of Hurghada's most upmarket locations - nestling between the villas of Mubarek 6, which are very popular with Europeans, and the exclusive villa district of
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View details | Enquire further
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Price: £26,000
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Type: Apartment
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Bedrooms: 1
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Kamareia Resort is a luxurious, new, low-density development that is being built in one of Hurghada's most upmarket locations - nestling between the villas of Mubarek 6, which are very popular with Europeans, and the exclusive villa district of
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View details | Enquire further
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Price: £27,000
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Type: Apartment
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Bedrooms: 1
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Pyramids Beach is the perfect choice of development for anyone on a budget who is looking for affordable seaviews and beach access, plus all of the facitlities one would expect from a high class resort.
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View details | Enquire further
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