Mention Egypt and people will start to think about ancient pyramids and mummified kings. To the experienced traveler, Egypt is much more than its well known relics. It is still an important cultural and historic center of both the Middle East and Africa. Tourists attracted to this ancient country come for many reasons. In addition to the magnificent historic sites, it has a fascinating culture, beautiful beaches, scrumptious cuisine and a climate that allows travelers to enjoy themselves all year round.
Egypt has “one of the most beautiful seas in the world which is not only rich in flora and fauna but in medical properties, as well,” said Aelita Romanchenko, a Property Advisor at Lincom Real Estate Jsc. The Red sea occupies the second place in the world, after the Dead sea, in respect of salt percentage.” Indeed, after checking out the spectacular Giza pyramid complex and its Great Sphinx, travelers can head to the gorgeous red sea beaches to relax their tired bones.
Vacation home buyers, mostly from Europe and the Middle East, have been purchasing property in Egypt for some time now. These buyers are attracted by “All year round summer temperatures, comparatively low prices, [expanding] property [values], and low cost of living,” said Romanchenko.
Egypt at a Glance
The North African country of Egypt has been a famous cultural and historical center for centuries. In addition to being bordered by the Mediterranean in the north and the Red Sea in the east, it is a neighbor to the Gaza Strip, Israel, Sudan, and Libya. Egypt is home to approximately 83 million people and is the third biggest country in Africa in terms of population. The country itself covers some 390,000 square miles, the combined size of Texas and California. However, the majority of its citizens live in the Nile Valley Delta, close to a water source on which they almost entirely depend for their agriculture needs. The rest the country is mostly desert and includes parts of the Sahara.
Egypt’s economy has been growing steadily since 2004 when the country began undertaking important reforms, according to a report by the Oxford Business Group. Some 20 billion dollars in foreign direct investment flowed into the country between July 2007 to July 2008. It also helps that, unlike others in the region, the Egyptian economy is not dependent on just one or two sources of revenue. Hydrocarbons, manufacturing, and agriculture all make up major chunks of its GDP.
Tourism is also an essential source of employment and income. About a tenth of Egyptians depend on the sector to support themselves and their families. It also makes up roughly 16.3 percent of GDP, according to the World Travel and Tourism. Some 11.1 million people traveled to Egypt in 2007. The development of virgin areas on the the Mediterranean and Red seas coasts is expanding as the tourism sector continues to grow, according to Oxford Business Group. Egypt must soon grapple with questions of how to best balance its historical heritage with the fast paced development that is currently taking place within its borders.
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Still, the government may have other more pressing priorities. Some 20 percent of Egyptians live on less than 2 dollars a day. This leaves the sate to provide expensive subsidies on essentials such as bread and fuel. The good news is that Egypt’s economy is likely to continue to grow for the foreseeable future.
Real Estate in Egypt
The construction and real estate sector grew by some 14.9 percent in 2007 and continued to grow at a healthy pace through 2008, according to a report by the Oxford Business Group. Some estimates put the amount of units needed to meet the domestic housing demand at six million. Real estate makes up 8.6 percent of the country’s GDP and 11 percent of Egyptians work in the sector. “Current state of real estate market in Egypt is stable in general with growing purchasing figures,” said Romanchenko.
Prices in general are low, especially when compared to similar properties in North America and Europe. “Prices for property depend on size, location, quality of property’s [finishing],” said Romanchenko. “For example, an apartment of about 970 square feet with beach front location may cost minimum 80,000 USD. An apartment of the same size but located in the middle of the city [can cost] a minimum 40,000 USD. Minimum cost of villa with prime beach location is about 200,000 USD.” Beach front properties are popular, especially in places like Hurghada, El Gouna, and Sharm el Sheikh, with foreign buyers.
Buying Real Estate in Egypt
Law #230/1996 allows Non-Egyptians to acquire property in the country. “With your passport you can buy the property what you want,” said Romanchenko. Indeed, you need your passport and a quiet a bit of patience to purchase real estate in Egypt. There are some restrictions foreigners must follow.
Non-Egyptians cannot own more than two properties and the properties together cannot exceed 43,000 square feet, according to Global Property Guide. All purchases must be approved by the Council of Ministers. There are also restrictions on selling and renting for a period of five years once properties are registered.
Some areas of the country, such as Sharm El Sheikh, can be registered following an entirely different process. The process, known as “signature validity court verdict”, gives international buyers 99 year leases but doesn’t place any limitations on how much property they can acquire. Unlike registered ones, property bought through this method can also be rented or sold any time.
While the “signature validity court verdict” gives buyers some freedom in terms of what they can and can not do with their properties, it comes at a cost. These properties are not as well protected as those bought through the process laid out by law #230/1996.
Foreigners need to also beware of swindlers who take advantage of buyers who are naive. “Never sign a contact you are not able to read!” advices European Real Estate – Red Sea, a property company that helps non-Egyptians acquire property.” Foreign customers frequently get the information that the Egyptian courts would accept only contracts in Arabian language. This information is wrong,” according to their website www.realestate-redsea.com. Just like else where, it is important to check the papers of the ownership very well,” said Romanchenko.
With the domestic demand for property exploding, Egypt’s real estate market is likely to continue growing in the long term. Even in the short term, the market seems to have started recovering from the effects of the global economic slow down, according to EFG Herms, a local investment Bank. “[The market] will continue to grow and become more developed,” said Romanchenko.