Reasons Why Egypt is an Intelligent Property Investment Location:
1. Steady capital growth
Based on a steady increase in investments in the tourist sector and a resulting surge in visitor numbers, Egypt property offers promising growth potential to all types of investors, while some areas of the Red and Mediterranean Sea coasts as well as certain areas of Cairo and Alexandria, are currently attracting as much as 25% annual capital growth. Investment in Egyptian property is offering great opportunities for purchasers while it waits during the infancy of an exciting emerging market.
2. Stable and growing economy
Although it may seem like an overnight success story, Egypt’s economy began its dynamic growth in 2004, with the reforms implemented by the new cabinet. The Real Estate Finance Law is one such reform which was passed even earlier, in 2001. Interest rates, which have been stable since the turn of the millennium, have also been a major contributing factor to the rapid growth.
The Real Estate Finance Law passed over six years ago has only now begun to create a real, albeit small, mortgage market. The mortgage industry received a much needed boost in 2007, due to the launch of the Egyptian Company for Mortgage Refinancing (ECMR), which provides 20-year secured loans to banks, who will in turn provide mortgages to individuals at an interest rate of 11 percent, compared to existing mortgage companies which have so far only offered 10-year tenure mortgages, with higher interest rates.
Add to that investment from Gulf States who see Egypt’s potential and you have a recipe for success. And as the old adage goes, success breeds success. The market is ripe for investors, large and small, especially with a new stock exchange catering to SMEs which will be launched later on this year, and will give even further opportunities for firms, funds and even individuals to invest in Egypt.
The Investment Security Legislation enacted in 2007 has boosted investor’s confidence in Egypt, and the UAE was reported recently by the Financial Times as the biggest Gulf investor in Egypt, investing $3 billion in 2007.
The real estate market is booming on the back of those three years of economic growth, averaging at 7 percent, and is one of the most active sectors in the economy. 2007 was one of the busiest years that the sector has seen. According to an article by Business Intelligence Middle East, the real estate sector’s contribution to GDP in 2006/7 was 8.3 percent, while it grew at a rate of 15.8 percent.
The market has been revitalized by a strong demand for housing away from the hustle and bustle of Cairo, by government efforts to promote expansion into nearby areas and investment from the region, in addition to enormous European interest in properties located on the Red Sea.
3. No capital gains tax
4. Low registration fees
5. No inheritance tax
6. Beautiful, well established tourist hotspots suitable for varied tourist interests, from excellent diving and snorkeling to cultural and historical locations
7. Stunning natural and unspoiled landscape
8. Steady annual growth in tourist figures
9. Warm desert climate with temperatures ranging from 14°C in winter to 30°C in summer
10. Relatively low cost of living and maintenance costs