Famed for its ancient civilisation, Egypt has become a retreat for British holidaymakers escaping the high exchange rates of the Eurozone since the onset of the credit crunch.
Overview of the property market in Egypt
Egypt's property market has now started to attract British buyers, who have been slower to invest than buyers from Russia, Poland, Slovenia and Germany - although fewer Germans have entered the market recently due to poor economic conditions back home.
Choice of properties in Egypt
The Egypt property market is currently dominated by the traditional tourist honeypots of Red Sea Riviera resorts Sharm el Sheikh, El Gouna and Hurghada, while Valley of the Kings and Queens home Luxor, the start point for Nile cruises. The Red Sea is becoming increasingly popular as a watersports hot spot and for scuba diving, providing some of the world's most stunning underwater scenery.
Property market in Egypt
The Red Sea Riviera has benefited greatly from Egypt's building and tourism boom. El Gouna boasts a large range of marina-style developments, while building has stopped altogether at Sharm el Sheikh, which should keep prices rising. Lots more purpose-built resorts are being constructed along the coast, the most popular of which is Hurghada, where property is still very cheap.
The pick of Egypt's city property markets are Cairo and Luxor. Cairo, as the country's centre for business and international relations, has a thriving rental apartment market and high rental yields. Tourist centre Luxor is starting to take off as an investment zone, with newly designated land to the south of the city allocated for development.
Capital appreciation for Egyptian property is forecast at between 15 per cent and 20 per cent on average.
Process of buying property in Egypt
- Using a lawyer with experience of the Egyptian market is essential. Ask if they have visited Egypt themselves and dealt personally with the local governor and planning departments.
- Once you have decided on a property, reservation deposits are required while your contract is prepared. These range from £1,000 to 10 per cent of the purchase price. This may be payable via your lawyer or direct to the developer - but avoid handing money over to an agent.
- Within 30 days, you will be asked to sign a purchase contract, where 50 per cent of the cost is payable. Ensure your lawyer approves the contract terms first.
- Balances of payments may be spread over the construction period, with the final balance paid on completion. The final 5 to 10 per cent is left until after a snagging quality check, when you will visit your property and sign your acceptance of it.
Fees and taxes
- Currently, there are no purchase, capital gains or inheritance taxes in place for ex-pats who buy in Egypt. Although this could be set to change on the purchase tax front, as Egypt renews its taxation system. Homes valued at more than £109,000 will face a duty charge of 1 per cent, although owners will have a chance to appeal against a valuation in a period of up to 60 days.
- Homes under a £45,000 threshold will not be taxed at purchase.
- Income is taxed at 20 per cent, so owners who rent out their homes could have some tax to pay on rental yields, although this is usually only levied on high amounts.
Registering your home is essential. There are two methods of doing this:
- Re-sale properties may be sold with a full Green Contract, the equivalent of a title deed from the British Land Registry. This is the most secure method of purchase, but it does restrict the amount of properties ex-pat buyers can purchase to two, which once registered cannot be sold for five years. This method costs upwards of £1,000 to carry out.
- Most buyers offer for the less restrictive method of signature validation. Here, either the developer you are purchasing from or your lawyer will register your purchase contract with the local notary. There is no limit to the number of properties ex-pats can own under this system, nor restrictions on sale. This registration method will cost £200, five times less than to purchase a Green Contract.
Hot spots to buy property in Egypt
Located on the coastal strip between the Red Sea and Mount Sinai, the city of Sharm el Sheikh has been proved popular with holidaymakers and investors alike over the last two years. But the area is getting increasingly built up, with land for new development scarce and prices rising. All properties purchased in Sharm el Sheikh are leasehold with 99 year leases, as opposed to the freehold status for mainland property. But prices are still reasonable, starting at £19,000, while rental yields remain high at 25 per cent on 10 week letting periods.
Formerly a small fishing village, fellow Red Sea resort Hurghada is fast becoming a rival to Sharm el Sheikh now it has its basic infrastructure in place. Prices are lower, starting at £14,000.
Luxor, with its easy access to the River Nile and many historic sites, is earmarked as a big growth spot for residential tourism. Property is more expensive in Luxor, rising to six figure sums for apartments with views of the Nile.
Buying in Cairo is more the preserve of the serious investor less interested in buying a holiday home. Prices in the capital are increasing quickly due to rising demand, as Egyptians are starting to take out mortgages for the first time, with rental yields among the highest in the world at 12 per cent, although apartments are still reasonably priced in five figures, rising to six figures for houses.
- Population: 76 million
- Capital: Cairo
- Languages: Standard Arabic written, Egyptian Arabic spoken. English and French also widely used
- Area (km2): 1,001,450 sq km
- Currency: Egyptian pound
- Dialling code: +20
- Emergency services: 123
Egypt boasts a relatively high standard of healthcare - many doctors are Western-trained and speak perfect English. The medical facilities in Cairo, Alexandria, tourist honeypot Sharm el Sheikh and Hurghada are reportedly fine for routine healthcare problems, although emergency services can sometimes be limited.
Buyers should also be aware that all hospitals and clinics are privately owned. As tourists are often charged the highest prices, more than at an equivalent hospital in Europe, it is best to arrange medical insurance before you travel.
Egypt is five hours away from most European capitals, with scheduled flights to Luxor, Cairo and Sharm el Sheikh in place. As a non-Eurozone country, Egypt has proved popular for recession-weary holidaymakers, so new flights are being added all the time. Monarch Airlines, Jet2.com, BA and Thomson Airways are some of the operators increasing flights to regional airports across the UK to emerging destinations like Hurghada.
Buying property in Egypt - top tip
When you find a home you are interested in, make sure you check out homes previously built by the company you are planning to buy from. Build standards can vary hugely, so it is best to be cautious.
Some information contained herein may have changed since it was first published. HomesOverseas strongly advises you to seek current legal and/or financial advice from a qualified professional.