Is criticism of Egypt's real estate sector warranted?

Discussion in 'Egypt property' started by totallyproperty, May 15, 2014.

  1. totallyproperty

    totallyproperty Administrator Staff Member

    Over the last few days we have seen some criticism of the Egyptian property sector with some "experts" suggesting that 92% of Egyptian real estate is not registered with the authorities. There is talk of "informal sectors" within the Egyptian economy and it would be interesting to hear from those on the ground about these particular allegations.
     
  2. NeilHollingsworth

    NeilHollingsworth New Member

    Registering a property in Egypt is called The Green Contract, and the Green Contract can only be applied for once the whole development has been completed and the land registered by the developer/builder/land owner. Once this has been done each individual purchaser should be given a Power of Attorney once they have paid all their payments, this POA gives them the right to register the property in their own name and get the Green Contract.

    However, as with many "admin" procedures in Egypt, it is a very lengthy process (can take up to 2 years), and compared to some of the property prices, classed as expensive, with solicitor fees alone being up to £1000+ (due to the length of time it takes) and a payment to the government (it has recently changed and I think it is now 20le per m2).

    This is one of the reasons many properties aren't registered, some owners probably don't even know about the process, one of the other reasons is once a property has been registered, it can't be registered by any new owner for 5 years, which can have an effect on resale as the new owner can't register it in their own name (many think the property can't be sold for 5 years after registering, but it is the re-registering that is the issue)

    I would however recommend everyone registers their property as this is the only way to guarantee it is yours, especially with all the previous trouble of properties being double/triple sold)
     
  3. Steve Hand

    Steve Hand New Member

    Surely the onus is on the developer to register the property in the name of the new owner ?
    Power of Attorney is given by one individual to another in order that the second party can act on behalf of the first (normally only in cases where the first party can not be present to complete title registration formalities) - how can a new owner give themselves Power of Attorney ?
     
  4. NeilHollingsworth

    NeilHollingsworth New Member

    Hi Steve, no it is the buyer that registers if they want to, as I say not many do. The POA given by the landowner/builder gives the buyer the right to register, which they do via a lawyer.
     
  5. Steve Hand

    Steve Hand New Member

    Hi Neil,
    Up to 2 years to register a property - wow !!! Not exactly an incentive to buy !!!
     
  6. NeilHollingsworth

    NeilHollingsworth New Member

    Hi Steve, I know it is a slow process but it doesn't affect buying, the buying process is very quick and simple and once you have the POA it is just a matter of waiting for the registration process.

    The problem is nothing is computerised in Egypt, all paperwork is done by hand.
     
  7. Steve Hand

    Steve Hand New Member

    Just one more thing Neil - does the Seller / Builder retain legal ownership until the Buyer registers the title ?
     
  8. NeilHollingsworth

    NeilHollingsworth New Member

    In theory yes, but as they have signed the POA and given it to the buyer if anything was too happen and it went to court the buyer would of course have the legal papers to show they are the legal owners of that apartment.
     
  9. Steve Hand

    Steve Hand New Member

    Hi Neil - all sounds a little dodgy - if it went to court, the POA does not prove ownership, only that the developer has very given the Buyer POA to register the property. Up until registration, the Builder holds the title to the property. So, if the Buyer can not be bothered to register the property (and you say many do not), then the Builder will retain ownership !!!
     
  10. NeilHollingsworth

    NeilHollingsworth New Member

    Hi Steve, it's not "dodgy" because owners can register if they don't then it is their responsibility. It also comes down to buying on the right development from the right builders and using the right agent (doing research and homework) just like all the developments in Turkey where the owners can't get the Tapu's, there is good and bad the world over.

    Hopefully after the past troubles in Egypt potential buyers will start doing more research on all aspects of the purchase and help eradicate the cowboys (developers and agents), if no one buys from them they will soon vanish. This will ensure the safety of any property purchase
     
  11. Steve Hand

    Steve Hand New Member

    I get what you are saying Neil - it just seems a little odd that the title holder (Builder) has to give POA to the Buyer in order to allow them the privilege of applying for their title deed. And there is no way a court would recognise as POA as legal title !!!
     
  12. NeilHollingsworth

    NeilHollingsworth New Member

    Hi Steve, a lot of what happens in Egypt is strange which is why many people fell foul when the sharks from Spain and other destinations moved in around 2006 and agents were given the wrong information from local lawyers who were in cahoots with the sharks.

    There are still some sharks over there continuing to try and deceive but as I say as long as buyers do their homework and lots of research, ask questions, read forums like this one, they can learn a lot about the process and hopefully dodge the sharks and buy trouble free. The courts will recognise the POA, the system over there is a lot different to other countries and the court/legal system is in a league of strangeness all by itself :laugh:
     
  13. Mantis

    Mantis New Member

    Sharks

    It is not the sharks that cause the troubles, it's the system we operate in that is deeply flawed. Yes the market was successful prior to the economic crash of 2007 but the mechanism to prevent it from collapse again still needs to be addressed at political level.

    It is officialdom and poor governance that needs to be corrected so before one proceeds in purchasing in Egypt do more than research, check if the developers have enough capital of their own to build without your deposits. That takes good due diligence checks, which pre-2007 were questionable.
     
  14. Steve Hand

    Steve Hand New Member

    Agree Mantis - but even the strictest governance will not eradicate all of the get rich quick scumbags that pollute the overseas homes market. Only last year, i learnt of a situation in which a Scandinavian woman handed over 40.000 € in cash as a deposit on a unit in a 'soon to be built' project - all on the strength of a chance meeting in a bar - nice work if you can get it !!! No prizes for guessing whether or not she ever saw this guy again.
    The gullibility of these people both angers and bemuses me in equal measure.
     
  15. Mantis

    Mantis New Member

    One of the biggest scandals in Egypt right now Steve is the Marsa Alam Beach Resort project with its sister development in Zafarana, marketed by IPI - El Sery with £45 million of investor money having gone astray by a Dutch Group supposedly guaranteeing bank transfers through an escrow account and approved by both European and Egyptian law officials.

    In Egypt there is no such bank service. The hype people believe is incredible.
     
  16. Steve Hand

    Steve Hand New Member

    Mantis - if this development is attracting publicity for the wrong reasons, then how come you can still find agents advertising it as an 'investment' opportunity - shame on them !!!
     
  17. NeilHollingsworth

    NeilHollingsworth New Member

    Hi Steve, hence my comments on researching developers and agents!!!
     
  18. Steve Hand

    Steve Hand New Member

    Fair play to you Neil - but i believe there are as many bad (or at best average) ones as there are good ones - and many a buyer will make a judgement on first impressions.
     
  19. Mantis

    Mantis New Member

    Precisely Steve. Projects like these will be left on the market while ever agents think they can fleece more fees. But there are some agents and legal professionals who are following up claims and refunds for their customers rather than running away from responsibilities.

    Those who were involved with fraud or aided and abetted will subsequently be made accountable. It took three years to get verdicts for Mubarak and his cronies who partly funded their lifestyle from real estate fraud, so other high profile cases will follow.

    Yesterday Consul John Hamilton had a meeting in Hurghada but his stance is simple. Ignore what is difficult, carry on camping because his department is ineffectual. That's the truth.

    Yes, criticism is warranted otherwise the corruption continues.
     
  20. NeilHollingsworth

    NeilHollingsworth New Member

    Thanks Steve, and I would say there are far more bad or at best average ones out there than good ones, because being a good agent takes time, energy and you don't make as much money because you spend time looking after your clients until they get the keys and beyond rather than vanishing once paid and looking for the next commission.
     
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