Guide to Property in Egypt
Egypt sits on the brink of a property boom, while property prices in the past few years have already increased by a staggering 20-30% per annum in many locations.
Investment property in Egypt focuses mainly on the coastal hotspots of the Mediterranean and Red Sea as well as on some purpose built residential enclaves around major cities such as Cairo and Alexandria. The Red Sea is experiencing an exciting new wave of construction that is set to satisfy Egypt’s growing tourist economy. At a mere 5 hour flight from the UK, Egypt is a top medium haul destination and, due to a solid transport infrastructure and good amenities, it continues to attract tourists in their droves. They come to enjoy a rich variety of cultural activities as well as fantastic beaches, water sports and desert safaris.
Since 2005, Decree number 548 facilitated the purchase process for non-Egyptians wishing to invest in the tourist sector and an uncomplicated tax system with many tax exemptions are further incentives for foreign investors in Egypt.
Propertyshowrooms.com and Property in Egypt
Egypt’s economy is strong and increased government policies to boost the country’s tourism sector are strong indications of the future success of your property investment in Egypt.
The success of property investment in Egypt relies heavily upon the ever increasing tourist industry. For now, prices remain incredibly low (from 30,000 euros for a seafront apartment) and offer excellent potential for capital growth in the near future.
Increased demand for year-round holiday rentals within newly built purpose built complexes is fueling the property sector and attracting well heeled international tourists looking for modern amenities within an interesting and exotic medium haul destination. Whether a holiday destination or an investor's dream, Egypt property therefore ticks many boxes in the property purchaser's wish list.
Foreign purchasers have the right to own real estate and land in Egypt. Today the government recognizes the great value foreign investors in property have for the success of the economy and have set about actively encouraging overseas buyers to Egypt. New laws have been established to make the Egyptian property purchase procedure more secure. For example, the government can no longer impound or nationalize any property they wish – a practice that stood for centuries. These changes, along with a few others, are increasing confidence among overseas buyers.
We will gladly guide your through the purchase process in Egypt to ensure you are fully informed of the facts to avoid any potential pitfalls.
Once you decide on a property, you will need to pay a holding deposit to take the property off the market while contracts are drawn up.
It is completely usual to negotiate a property’s selling price in Egypt, unless you are buying off-plan when the price is fixed.
Can Foreign Nationals Own Property in Egypt?
Yes, all foreign nationals are entitled to own property in Egypt. The government has recently streamlined procedures and introduced incentives to make operating in Egypt relatively simple and advantageous for overseas investors.
Why Should I Choose Egypt?
Egypt offers stunning natural features and a rich history and culture that will never fail to attract visitors looking for an interesting medium haul destination, only 5 hours flight from the UK. The property investment climate in Egypt has never been better and returns of between 20 and 30%, commonplace over recent years, look set to continue.
Egypt’s economy is reassuringly stable and the country shows great potential for those who buy property in Egypt now, while prices remain very low. Increased investment in the tourism sector and new and existing infrastructures as a whole will ensure that your property purchase is a profitable one.
What is the Economic and Political Situation?
Despite unrest in recent years, Egypt’s political situation today is stable and a completely democratic republic is expected within the near future. This bodes well for the country as a whole and puts Egypt firmly back onto the tourist map. Egypt’s political system currently receives much needed financial support from the US which is helping to project the country into a new era of optimism.
Economically, Egypt’s emerging property market and established tourist industry look set to complement each other perfectly. The Egyptian government is committed to encouraging much needed foreign investment through political reforms which are boosting the economy to new levels.
How do we Travel to Egypt?
By Air
Egypt is a pioneer of air transport in the Middle East and Egypt Airlines connects almost all parts of the world, including 72 world cities in addition to 12 Egyptian cities, which is good news for investors of property in Egypt.
There are many airlines serving Egypt from the UK. New services and fares are constantly being added to their routes, so you should refer to the following airlines for more details:
- British Airways
- Egyptair
- Excel Airways
- First Choice
- Flythomascook.com
- GB Airways
- Sudan Airways
- ThomsonFly
If you have the budget, flying within Egypt is your best option. Egyptair flies daily from Cairo to Alexandria, Luxor, Aswan, Abu Simbel and Hurghada, and twice a week to Kharga Oasis. Egyptair has booking offices throughout Egypt if you decide to buy a ticket while you are visiting. It is adviseable to book well in advance during peak season.
Air Sinai (a subsidiary of Egyptair) flies from Cairo to Hurghada, Al Arish, Taba, Sharm el Sheikh, St. Catherine's Monastery, El Tor, and to Tel Aviv, Israel.
Egyptair Offices
Alexandria: 19 Midan Zaghloul. Tel: 492-0778.
Cairo: 6 Adli Street, Tel: 920-000; 12 Qasr el Nil Street, Tel: 750-600; Nile Hilton Hotel, Tel: 759-703; Cairo Sheraton, Tel: 958-408.
Heliopolis: 22 Ibrahim el Lakani, Tel: 668-552.
Luxor: Winter Palace Arcade
Aswan: Corniche.
Train
Trains are an excellent way to travel within Egypt. Trains are sometimes air-conditioned express versions. However, trains do not go to Sinai or the main beach destinations of Hurghada and Sharm el Sheikh.
Ferries
Ferries operate from Greece and Cyprus to Alexandria.
The River Nile
The romance of a Nile Cruise has captured tourists’ imaginations for many years. The Nile Cruise used to be the only way tourists could get to the tombs and temples of Luxor and today you can get excellent package deals, usually ranging from 4-7 days. Most boats depart from Luxor, sailing down to Aswan, with stops at Esna, Edfu and Kom Ombo.
Bus
Buses range from modern luxury to overcrowded and uncomfortable. In general, the faster and more luxurious buses will run between major cities and tourist destinations. Tickets can be bought at bus stations and often on the bus itself.
Across International Borders
From Israel
Private cars are not permitted to enter Egypt from Israel. However public transport is available via Rafah on the northern coast of Sinai or from Eilat on the Red Sea. Buses run regularly from Tel Aviv and Jerusalem to the border at Rafah. Passengers go on foot from an Israeli vehicle, go through customs, then take an Egyptian bus or taxi. Remember that there are no facilities for issuing visas at the Rafah border. In Eilat, Israeli buses are permitted to enter Egypt and travel as far as Sharm el Shaykh at the southern tip of the Sinai.
From Sudan
There is a twice-weekly car ferry that runs the length of Lake Nasser, from Wadi Halfa in the Sudan to Aswan in Egypt. Information is available from the Nile Navigation Company Limited, Ramses Square (in the train station), and Nile Maritime Agency, 8 Quasr el Nil, both in Cairo or the Nile Company for River Transport, 7 Atlas Building, Aswan. All arrangements to enter Sudan, including visas, must be made in Cairo. You will need a valid passport and either a transit or tourist visa to Sudan. If you plan to pass through Sudan you must have a visa for your next destination.
Is a Visa Required to Enter Egypt?
Visas are required for entry to Egypt. EU nationals travelling to Sharm El-Sheikh, Dahab, Newiba and Taba for up to 14 days receive a free visa stamp in their passports upon arrival. Tourist visas for Egypt can often be obtained upon arrival in Egypt for citizens of most countries, otherwise a visa will need to be applied for. Work visas are also required for renewable periods of 12 months.
Lawyers
Lawyers in Egypt will normally speak English and will be able to produce your necessary paperwork in Arabic, as required by all the authorities. Egypt has many complex real estate registration issues so it is critical to have a lawyer conduct the appropriate searches and provide you with legal advice regarding the purchase.
Local lawyers will also help you through the best way to conduct business with the local people who have their own particular idiosyncrasies and customs which are important to be aware of.
Fees and Taxes
Property registration and legal fees for conveyance total around 6%.
Stamp Duty on property is payable by the buyer at 3%. The buyer will also pay a small inspection and measurement fee (approx. 65 euros).
Tax on any form of income from property runs at 20 to 22% and is basically the alternative to Value Added Tax. Many countries enjoy a double taxation treaty with Egypt.
Egypt levies no inheritance or capital gains taxes.
Registration
Most Egyptian properties are not registered, even though registration is an essential pre-requisite to a purchase. Therefore the lawyer’s assistance in liaising with the Real Estate Registration Office in Egypt is essential in order to ensure the property is duly registered and prepared for foreign purchase. Registration can take up to four months. After inspections and payment of taxes/fees, you will finally obtain a new title from the Registry.
Mortgages in Egypt
The mortgage market is relatively under-developed in Egypt but due to newly implemented mortgage laws, foreigners can now obtain Egyptian pound mortgages for loans of up to 85% LTV. Lending can extend to 30 years up to the maximum age of 65 and maximum monthly installments are not to exceed 25% of your monthly income. However, currently the interest rate stands at around 14% p.a. so many buyers still prefer to seek alternative means of finance.
In order to obtain pre-approval, proof of land ownership is required, as is the name of the developer.
This new law is expected to open up the market considerably and create a storm of development and real estate activity in the near future. The past lack of a fully developed lending system slowed down the construction industry in Egypt. Even though Cairo is one of the most densely populated cities in the world, there has been a high demand for new housing. This situation is destined to change just as soon as mortgage facilities become more developed in Egypt.
Many buyers usually arrange alternative financing in their own countries or free up equity via a re-mortgage or equity release system, allowing them to purchase their property in Egypt outright.
Some off-plan developments offer their own finance arrangements of up to 100% finance, depending on status. The charges applicable vary according to developer and repayments are usually indexed.
If you have property in your own country and would like to borrow against this in an equity release plan, we can introduce you to independent financial advisors who can help you raise the necessary finance.
Banking in Egypt
The banking system comprises 57 state owned commercial banks. This includes 28 commercial banks, four of which are state-owned, 26 investment banks (11 joint venture banks and 15 branches of foreign banks), and three specialized banks. Although private and joint venture banks are growing, many remain relatively small with few branch networks.
Egypt’s banking system has undergone major reforms since the 1990's and today we are faced with a liberalized and modernized system which is supervised and regulated according to internationally accepted standards.
The Central Bank of Egypt (CBE) & The Egyptian Banking System
Introduction of laws giving more independence to the CBE, and an electronic signature law Regulation of connected and related party lending Management reforms of the four public sector banks, making clear the responsibilities of managers and boards of directors Development of an automated credit risk information system (CRIS), from which participants would be able to gain online access to client credit profiles.
However, Egyptian banks are still behind other Western banks in supplying a good range of mortgage products to their clients. Although this is soon to change, the mortgage market is underdeveloped in Egypt and as yet foreigners cannot yet obtain a mortgage for a property in Egypt. In the near future, a new mortgage law will enable purchasers to take out property loans. This will open up the market considerably and create a storm of development and real estate activity in the near future.
Currency in Egypt is the Egyptian pound. 100 piastres equal one Egyptian pound (£E). Notes range from 25 piastres up to a 1,000 pound notes. The most commonly found notes will be 1,5,10, 20 and 50 Egyptian pound notes, while coins are rarely used as their worth is so small.
Bank opening times are 8.30am to 2pm daily, closed Fridays, Saturdays and most holidays.
You will also be able to change money easily at big hotels and cruise boats. You will receive an official receipt when exchanging money and this should be kept for possible inspection. Cash point machines are also available where you can withdraw cash.