Bank accounts insurance and transferring money to Egypt

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The Egyptian property market has become very popular over the last 12 months due to a variety of reasons, which include the relative stability of the economy and the ongoing attractions of a whole host of new and exciting developments in the country. However, there is an interesting thread on the Propertycommunity.com website headed Insurance, Egyptian bank accounts, transferring money which offers an interesting insight into the various options and services available for those with exposure to the Egyptian property market.

Insurance in Egypt

Unlike so many leading property markets around the world it appears as though insurance cover in Egypt is fairly straightforward with a number of major insurance companies offering more than enough cover to give homeowners peace of mind and something to fall back on in case of disaster. We hear so many scare stories about overseas insurance markets with endless documents and application forms required and small print which can in many circumstances make the actual insurance policy invalid.

Thankfully the Egyptian authorities and Egyptian insurance market appear to be very much “on the ball” and more than sympathetic to both domestic homeowners and international investors. This area of finance is fairly straightforward although Egyptian bank accounts and the transferring of money is a little more complicated.

Egyptian bank accounts

A number of posters have shared their experiences of the Egyptian financial sector and in particular the opening of Egyptian bank account. It appears as though it is not as easy as many had expected to open a bank account and expenses associated with an individual account can be substantial unless significant amounts of money are deposited. There is a suggestion that opening a bank account in Egypt would require at least a £50,000 in each account otherwise there would be very large charges attributed to your banking services.

However, a number of posters have highlighted the option of opening a bank account with for example HSBC in the UK which would serve as an “international bank account” with an ability to transfer money between Egypt and the UK with nominal transfer charges. It appears as though only $200 is required to open such an international bank account and this has proven very popular with many of the readers. However, transferring money between bank accounts is not as straightforward as it may seem!

Transferring money

A number of options regarding the transfer of money from the UK to Egypt have been suggested in the thread with many highlighting the fact that “free transfers” often attract a reduced exchange rate and may not always be the best way forward. A number of parties have suggested opening money market accounts with foreign exchange specialists who can often offer better exchange rates and reduced charges. While this is a market which few overseas homeowners may even have considered it looks as though it does warrant further investigation.

It is vital that you check out not only the charges you will incur with a transfer of funds but also the exchange rate as many banks and financial companies will give you a less competitive exchange rate and make money this way. Sometimes it may be best to shop around with various foreign exchange specialists offering nominal charges and a much better exchange rate.

Is PayPal an option for overseas investors?

While one contributor to the thread has suggested that PayPal could be an option in some overseas property markets, even though for this example PayPal service is not available in Egypt, many people may not realise that there are significant charges attributed to a number of PayPal transactions when transferring money. Many people also believe that the exchange rate received is not always as competitive as it could be and in general, while PayPal is useful, it may not be the best medium to service your overseas financial affairs.

Local currency

Although the local currency in Egypt’s is the Egyptian pound, a number of people on the post have suggested that the US dollar is probably the more useful and more popular currency to hold when you first arrive in the country. Tipping is a very common practice in Egypt and apparently the US dollar is very popular with the likes of bellboys and other people who you would consider rewarding.

The thread originated from a person was moving to Egypt and had just assumed it would be easy to open a bank account there and then but on reflection this is not the case. It is vital you have access to local currency (or a currency which is popular in the region) until you have unrestricted access to local banking services.

Egyptian property market

As the world economy continues to struggle the Egyptian economy has held up very well so far due to a lack of mortgage finance in the area and a trend toward cash payments for property transactions. While this will probably change in due course as international investors become more prominent in the market it has to some extent protected the local economy from the hustle and bustle of the ongoing worldwide decline.

Even though no market can ever be completely immune from the trials and tribulations of the worldwide market, especially to the extent we are witnessing at the moment, Egypt has become very popular and remains at the top of a number of property investors radars. However, trouble in overseas markets has seen some international funds repatriated although as yet there has been no substantial fall in property prices in the region.

Conclusion

Any overseas market will offer challenges for investors whether this is in the local property market or the local stock market and Egypt is no different. It is vital that you do not assume that all banking operations around the world and banking systems are the same because they are not and this can cause problems if research is not carried out – transferring money is something you should be especially careful of. As and when you move to a new country it is also vital that you have access to ready cash (in the local currency) immediately because access to local banking services may take a short while to conclude.

Egypt is a market which appears to be embracing the international property investor and the authorities appear intent on investing substantial amounts of funding into both the property market and the domestic economy. The slightly different make-up of the Egyptian financial market, and the lack of debt-financed property acquisitions, has offered some protection in the short term although as international investors become more prominent in the region we should see the percentage of financed transactions increase.

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