Egypt

Why buy property in Egypt?

At just five hours away from the UK, Egypt is a world apart. It was inevitable that the property market would follow hot on its heals, and now second-homers, retirees and investors are flooding Egypt’s property market.

Attracted by the low cost of living and year-round sunshine, many buyers are ditching traditional home buying destinations in favour of Egypt – assured by promised rental returns. Sharm el Sheikh is renowned for its diving, El Gouna boasts a luxury marina and Hurghada has no less than eight golf courses planned – all factors which should keep the accommodation-hunting tourists coming back again and again.

In addition, the sheer youth of the market bodes well for positive capital appreciation, while the tax situation is extremely favourable. All in all, Egypt seems to tick all the right boxes for overseas property buyers.

Popular property locations

The two most popular regions with the tourists who flock to Egypt are the beautiful and sunny Red Sea coast; and the daunting, noisy and fascinating capital, Cairo. Located around 30 kilometres from Hurghada, this purpose-built resort offers everything the second-home buyer could wish for; 13 hotels, an 18-hole golf course, a marina, school, and hospital all compliment the expected shops, bars and restaurants. Prices for a one-bedroom marina apartment at El Gouna start from around £130,000.

Meanwhile it is Sharm el Sheikh that still has the monopoly on the tourist crowds. Sharm also has a vibrant old town area with more traditional restaurants and cafes to soak up the local flavours.

More purpose-built resorts are being built along the coast of the Red Sea all the time, each one learning more from the experiences of the last so that the latest resorts are some of the most modern and well-designed in the whole region. More international flights are arriving into the airport all the time, and as the local infrastructure develops, so more tourists are attracted to the area.

Hurghada itself is one of the most important overseas property destinations in Egypt, and attracts lots of visitors of its own accord, rather than just being an airport transit town. The sandy beaches, warm waters and diving facilities, combined with the extensive golf facilities that are already in place and being constructed, make this a well-established destination in its own right.

Sahl Hasheesh is less than 20km from the international airport, and has been building high-end resort properties for the domestic and foreign investment markets for a couple of years. Investment properties in the city can be very profitable, though they are more likely to stay as investments rather than being used as holiday homes. Residents of Cairo escape to Alexandria for a break from the city. The ancient capital of Egypt and its largest seaport is developing into a modern resort for the domestic tourism market in Egypt, which means that the international crowds are likely to follow soon.

Finally, there is extensive construction of hotels and resort facilities in the southern city of Aswan, on the banks of the Nile.

The buying process

Despite registration being a legal requirement, only ten per cent of Egyptian homes fulfil this requirement, so if you are buying a resale home it is best to be prepared for bad news at this stage. Secondly, your lawyer will need to ascertain whether there are any outstanding debts registered against the property.

Legal issues

As mentioned above, obtaining a property that has clean title can be difficult. Thousands of other properties were handed down from generation to generation meaning that, in some instances, around ten members of one family could stake a claim in the property’s title. In order for the sale of such a property to take place all ten members must therefore agree. In addition, the registration process was expensive, resulting in many transactions taking place under the table.

You will also need to establish whether your property is freehold or leasehold. Some older resorts may only offer 50-year leases however.

Financing a property in Egypt

Some Egyptian developers will provide loans in order to encourage you to buy their particular properties, but these tend to be over a limited period of time. If you do decide to go down this route, however, be aware that this may tie you in to the development should you wish to sell your property – unless you can persuade your buyer to take over the loan as well.

Egyptian banks may also be able to provide a loan, but if so, it is likely to be quite a high rate and, again, over a short period. Property in Egypt:

Fees and taxes

New rules in Egyptian property law have made it much easier to both buy and sell property and, if you buy and sell in the right way, you may also be able to avoid income, inheritance and capital gains taxes. For example, buying through a company and placing ownership in a trust, are options well worth considering.

When purchasing, expect to pay around 1.5 per cent in estate agents fees. You will also need to budget for solicitors fees of around 2.5 per cent and another 2.5 per cent for government purchase taxes.

Egypt does have a double taxation treaty with the UK however so, if you are planning on renting your Egyptian property out, it is advisable to employ a British accountant to limit tax liabilities on any rental income received.

Visas, residency and work permits

In order to purchase a property however, you will need to obtain a residence visa.

New-build versus resale

As mentioned above, the greatest problem with purchasing a resale home in Egypt is ensuring that it has clean title. Meanwhile, if it’s a beach home you’re are after, there is a good selection of new homes available. New-build homes also have the added advantage of being situated on a purpose-built development.

Egypt’s property investment potential

As with any emerging market, there is no guarantee of positive capital appreciation in Egypt. Rental potential is also good, providing you chose wisely, as Egypt has a strong tourist trade thanks to its ancient culture and excellent diving. Easy access, a good climate, increased inward investment and a favourable tax regime complete the picture.

Health and education

You may be required to produce proof of vaccination against certain diseases, such as yellow fever and cholera, depending on which country you enter Egypt from.

Wherever in the country you are travelling, it is imperative that you take out adequate travel and health insurance – especially as there are no reciprocal healthcare agreements between Egypt and the UK. There are two recognised International British Schools in Egypt, however both of these are situated in Cairo. The large resort of El Gouna on the Red Sea Coast also boasts a co-educational international school which is based on the English curriculum. Entry is based on a successful interview and examination results.

Transport

Both British Airways and EgyptAir operate regular direct services between Heathrow and Cairo International Airport. Once in Egypt, it is possible to get connecting internal flights to the resorts such as Hurghada. If you wish to stay on terra firma, however, there are a range of options available to you. The cities offer bus, tram and metro services.

And finally…

Real estate agents in Egypt are not regulated, so it’s imperative that you do your homework before buying. It is your solicitor’s job to ensure that the development has a comprehensive bank guarantee should the worst happen.

The sheer scale of building currently underway is also something to consider – especially if you are buying solely for investment purposes.