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Apartment in Hurgada vs 5* Resort

Discussion in 'Egypt property' started by Shkrjaga, Dec 5, 2007.

  1. Shkrjaga

    Shkrjaga New Member

    Hello All! I'm planning to buy property in Hurgada for rent and occasional personal use. Upon examining this extremely useful forum I am in doubt what to choose: apartment in town or property in Resort. I tried to make comparison, using both numbers from this forum and obtained from developer.
    Here they are:
    1. Pyrasmiza SAHL HASHEESH 5* Resort, first line.
    - Studio with the sea side view 47 sq. meters.
    - Price $80 000.
    - 4 week for personal use.
    - Rental plan 8% x 3 years (the best).
    - Rental income $4000 a year.

    2. 1-bed in the second line in good location near the beach, Hurgada.
    - price approx. $ 50 000.
    - Rent at the worse price I've heard here - 100 pound per week.
    - 4 week for personal use.
    - Rental income 48 x 100 = 4800 pound = $9600 a year.
    Let us assume roughly that agency fee, idle time and other expenses will half this: $4300 a year.

    We can see that in worse case the income nearly the same when the Resort property price is 60% higher. Beside, I don't like the following in contract:
    "15.2 In addition to the annual return on investment, the seller gives the buyer of the property or his guests the right of a free stay for a number of …… weeks annually excluding New Year week , Easter Week and the month of August and according to the availability within the resort . The buyer should notify the resort management one month prior to their requested arrival date .
    15.3 The Buyer can exchange his week within Pyramisa Hotels & Resorts , according to availability."
    So I have to book MY property in ONE MONTH!!! And it may be rejected "according to the availability within the resort"!!!
    Isn't if a little bit unfair???
    Any feedback truly appreciated.
     
  2. WESTMIDS33

    WESTMIDS33 Banned

    Hi,
    It does seem a little unfair but you will have to weigh up what you want with this project: personal use or regular rental return. I visited the pyramisa and from what I saw it was very popular. Whether this stays the same when other hotels are up and working only time will tell.

    Regards

    Westmids33
     
  3. SHO

    SHO Member

    Its not unfair because they guaranteeing you a rental income. You dont have to take the rental contract with Pyramisa in which case you can do what you want with your apartment...however that is part of the term of their agreement.

    Knowing the developer however... I will say ask them to change it as they are normally quite reasonable and will change clauses if clients have a point. You may wish to add something like you are guaranteed your week if you book 6-8 weeks in advance or something along those lines?
     
  4. awahee123

    awahee123 Banned

    It has to be Hurghada for me as I am only bothered about a holiday home for myself,however if I was looking at renting I would certainly look at a 5 star resort.
     
  5. Shkrjaga

    Shkrjaga New Member

    Thanks for a good idea! Aprreciate it :)
     
  6. Shkrjaga

    Shkrjaga New Member

    See you point. Trying to combine both options:)
    2 All Honestly, What have struck me most is that rental income for more expensive property in more expensive area in the first line seems to be nearly the same as for the less expensive one in the less expensive area in the second line. Do you see my point?
     
  7. awahee123

    awahee123 Banned

    Hi all,
    I haven't seen any concrete rental prices at the moment,what I will say if rental is more or less the same then if i was looking to rent I would surely pick beachfront.
    I think what we will find is to start a new market of rental in a certain area it will be introduced lets say with a reasonable rental for various reasons,eg the whole development may not be finished.
    We will only find out the true rental value once all current developments are finished.
     
  8. Mark .Y.

    Mark .Y. New Member

    I have to say that in my opinion anybody who is buying in Hurghada and relying on rentals is going to be disappointed.
    From a supply and demand point of view, there are so many apartments going up that you will have to be very good at marketing your property to get a decent number of rentals per annum.
    At the moment there is too much against it: in particular you will do very well to get cheap flights and Sharm is far better known to tourists.
    Of course, if you are buying for yourself - that is a different matter and also if you can afford to wait it is not unreasonable to believe that in a few years time the rental market may be better. Cheap flights and good publicity being the key drivers.
    Sahl Hasheesh and the other upmarket developments are/will probably be better. After all, there are always people around who are happy to pay for a higher quality product.

    Mark .Y.
     
  9. Peter Mitry

    Peter Mitry <B>Egypt Forum Founder Member</B>

    I certainly agree with your comments concerning the rentability of front line beach property, like in Sahl & El Gouna. Hotel prices may be cheap and they are good for getting people to 'discover Egypt' but after that most people prefer to be in their own rented property where you do exactly as you like and eat when and where you like. Also at peak periods hotel rooms in the better resorts can be scarce as many people found in Hurghada last month!!
     
  10. Peter Mitry

    Peter Mitry <B>Egypt Forum Founder Member</B>

    Its interesting to look back on this post almost one year on and having now been living in Hurghada for most of that time.

    If you want nice facilities, pool, gym or beachfront you will have to pay European prices even for long term let and even then you will have to look hard to find what you want.

    In developments away from the beach there is still a lot under construction and prices are certainly lower. You can find a one bed apartment for 2000EL (250 GBP per month) or less if you are not too fussy about where it is. Better quality locations are still scarce and prices are high.

    Of course this should change as many of the projects under construction are completed and more stock becomes available but the beach is getting less and less and will always be in demand.

    There are good deals to be had in resort hotels at the moment; after a busy Christmas and New Year occupancy has dropped dramatically and this is propably the first experience Egypt has had of the global downturn.

    As to the future, who knows? The middle east is less affected by the credit crunch as few people depend on credit as in the West; prices are still firm as the Egyptian pound is so strong against the major currencies.

    However, the UK is still AAA rated and the pound should not stay down for too long. On the other hand the sun ALWAYS shines in Egypt and I would still rather live here than anywhere else in the world!
     
  11. jeremy bright

    jeremy bright New Member

    i am buying in marlion there is a 10% rental do you think it will work out if i buy a 2nd apartment and hope the rent will cover the bank loan
     
  12. Peter Mitry

    Peter Mitry <B>Egypt Forum Founder Member</B>

    Rental Guarantee

    Hi Jeremy Marlion is being marketed primarily as investment with the 10% rental guarantee which I believe is now for 10 years. My advice would be to check the small print to see if there is any get out clause; who is giving the guarantee? What happens if they go out of business More importantly, would it cause you a major headache if the guarantee stopped and you had to rent it yourself?

    Finally, would the 10% cover your loan repayments?

    I am sure that the property value will rise as Marlion is an unbeatable spot; also it should also be in demand from tour operators because of the great location.

    You have to balance all of these issues.
     
  13. jeremy bright

    jeremy bright New Member

    asked sigma yesterday was told sigma egipt are doing the rental and is backed by HSBC BANK
     
  14. Peter Mitry

    Peter Mitry <B>Egypt Forum Founder Member</B>

    Rental Guarantee

    It would be worth just checking this with HSBC or ask Sigma if they have anything in writing from the bank.
     
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