Why Buy In Egypt?

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This question has received as much varied answers as there are as much varied choices of property developments found all over Egypt. As a whole, members chose to buy their properties in the resort areas of the country, near the area of the Red Sea where in the properties afford spectacular oceanviews and quick access to the sea. The most common locations chosen by members included Hurghada, El Gouna, and Sharm El Sheikh. Their particular property development choices included Sahl Hasheesh, Hania Beach, regency beach, Desert Pearl, Lotus, Hurghada Dreams, Suleder, regency towers, Oasis Resort, Palm Beach Piazza, and El Andalous.

Yet as much as members gave varied choices in their purchases, there seemed to be a major consensus amongst members on their reasons for purchasing a property in Egypt. These locations were chosen based on capital investment, followed by the potential for rental returns, personal use, either as a holiday or retirement home, and most certainly, the allotted budget for the purchase. Preferences, such as the overall feel of the location, available amenities, and proximity to other premiere locations were generally secondary in the process of selecting a property.

There is a wide range of investment strategy available to a property investor. The choice of which strategy to employ is most certainly based on the investor’s objective of the investment, the level of complexities, and the investor’s attitude towards and willingness to take risks. Two most common investment strategies are discussed below:

A. Short-Term Investment Strategy (Flip Strategy)

This strategy involves the purchase of an off plan property and selling it prior to the completion of the project. In actuality, buying off plan is not strictly a property purchase as the property has not been completed. Instead, it is a purchase and sale of an option to sell the property. A critical factor to the success of this strategy is the key time in identifying the investment opportunity of a targeted off plan development.

Some benefits of employing this strategy include the opportunity to purchase at a much lower rate before prices begin to appreciate. Many property investors opt to employ this strategy because of its simplicity, and because it affords low initial investments. The highest risk element when employing this strategy is the sale of the property prior to completion or else the investor would be forced to complete the purchase with all the obligatory legal and financial consequences.

B. Medium-Term Strategy

This strategy also involves the purchase of an off plan property or a resale unit, wherein the purchase is completed and holding on to it for a certain period, and ultimately reselling. During this period, the property could be rented out, either on a holiday or long-term rental basis so as to generate income. Employing this strategy requires the objective of the investment to be clear, where it could be for income generation or capital appreciation. It is advisable to focus on one objective so as to maximize the return.

The Key opportunity when using this strategy is maximizing the possible capital appreciation by holding on to the property until the right market conditions presents itself. Conversely, an investor should carefully determine which property would fit for a particular objective, either for rental income or capital appreciation. So does Egypt fit with your investment goals?

 

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2 Responses to “Why Buy In Egypt?”

  1. We're a year on from when this article was written; and what a year it has been.

    Without wanting to debate all the issues above I would like to ad that I represent an organisation whom represents buyers looking for property globally. Egypt has been the only destination to hold the level of interest throughout a difficult 12 months for other regions.

    We have attributed this to the low cost of property, and importantly low cost of living in Egypt; it has almost no mortgages or lending and as such has not experienced the same liquidity crisis experienced in other territories. Another key factor is that many of the properties certainly property in Hurghada is sold in various currency's and as such continues to present opportunites for UK, US and Euro buyers whom may otherwise have head to consider the dramatic fluctuations in currencies agains the strength of the Egyptian Pound.

    Reply
  2. Financed Properties

    With a key selection of projects chosen by Coldwell Banker New Homes (established over 102 years), we work with only the largest and reliable developers within the region, of course one of the key issues is the fact that the developer is trustworthy and has a proven track record but also the fact that investors are gaining the most from their capital with no financial strain.

    Within our portfolio we have a selection of projects within Hurghada, Sharm El Sheikh and Marsa Alam which will suit all financial situations to get the most out of your investment

    Strong Yield

    An investment with a strong yield will generally be one that generates rental returns in excess of 5-8% gross. A property’s potential to achieve high yields will be affected by a range of factors, namely demand, location and desirability. Properties in prime tourist regions, popular expatriate cities or in markets where locals are priced out of the buying market will do especially well.

    Developments that offer guaranteed rental yields are often a good means of assuring a steady return as are fully managed properties where all rents are pooled and distributed according to unit size and price however this can work out less on an annual basis so it is important to weigh up your options.

    Low Deposits

    Low deposit investments are ones requiring only small down payments. Whether or not an investment property can be deemed low deposit will depend on their payment structure. The properties that afford the lowest cash deposits are generally those that have either staggered payments schemes or even better a deposit payment with nothing further to pay for the first 6 months – developers will normally give a payment plan but can accommodate both parties to allow ease on financial matters in special circumstances.

    Below Market Value

    As Egypt has not been affected by the Global crisis like other countries, property prices have remained pretty much the same. This is not due to financial issues within Egypt but developers have opted to keep prices the same to allow investors to still use their capital in Egyptian Property accommodating problems within Europe etc.

    However, some developers will start to increase their price per square meter next month due to the Real Estate Market becoming more in demand within the Red Sea region therefore making your investment more fruitful.

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