For emerging, read cheap and perhaps, a bit risky, but as as the most cliched of entrepeneurs will say — you have to speculate to accumulate.
The Egyptian Government, under President Hosni Mubarak, is very keen on Foreign Direct Investment and have smoothed the way for overseas buyers. You can now purchase freehold in Egypt, subject to certain conditions, but can only take a leasehold on properties on the Sinai peninsula.
This relates to the long-running dispute between Israel and Egypt, which was resolved in the Camp David agreement of 1979, after which the Sinai was ceded to Egypt.
A moderate and mildly democratic country, there have been internal attacks from Islamic extremists who have targeted tourists for the most part. This has created huge problems for tourism and FDI, and is the main reason why investors have shied away from Egypt in the past.
Now, however, with a booming tourist market and cheap property, the Irish are following on the heels of Italian, German and latterly, English investors.
The country has become increasing popular in the Irish market over the past four to five years and most major tour operators operate there, in pretty Sharm el Sheikh for the most part. These visitors are not drawn by the overwhelming archaeology of the region, but by the superb winter weather.
Southern Egypt has steady temperatures in the late 20s to 30s during our bleak mid-winter and the heat is moderated by a steady, cooling breeze.
Add to that the exoticism of the Middle East, good infrastructure, excellent food and superb diving and you have a destination that offers more than the Mediterranean coast. Egyptians generally are polite and hospitable and English is spoken fluently in most of the resorts. Hotel standards are generally five star and most package tours from Ireland are all-inclusive.
It’s the sea however that brings in visitors in their droves — the Red Sea Riviera has some of the best diving in the world around superb coral reefs.
With a long, white sand coastline and those balmy winter temperatures, this historic landscape is also attracting a young, adventurous buyer. Right now you can have a Red Sea pad for the price of a super mini or at a push, the cost of an average family car. Most come with sea views, and or, sea frontage and in one particular location, Regency Beach in Hurghada, you can literally wade out to the reefs for snorkelling. Developers work in tandem with Egyptian stakeholders and there are some elements to be aware of when purchasing property in Egypt.
If you’re prepared to take a punt on an average of €30,000 for a unit on the sea, then you can expect good capital appreciation — in the region of 20%, say Irish agents, The Right Move Abroad. Also, you are limited to the purchase of just two properties per person under a limit of 4,000sq m — still a substantial amount.
New schemes must be 60% complete before the development is registered, so there is the potential for things to go wrong. The government can take over certain developments if a scheme fails to reach the 60% limit.
However, with a favourable disposition towards foreign investment and a rapidly increasing tourist trade, addressing demand is a priority for the government, so the potential to one’s money is limited. Still, the risk exists.
Investors should get advice before making any commitment, either from the Irish Embassy in Cairo, or the Egyptian Embassy in Dublin.
Getting a good lawyer, who speaks English, or even a good translator, will ensure that your purchase is uncomplicated.
Transaction costs in the region are low, property purchases typically cost an extra 4% overall, and there is no capital gains tax. And if you use an intermediary, they are usually prepared to take on all the paperwork on your behalf, but be aware of the legal implications.
The Right Move Abroad, with offices in Kinsealy Dublin, are offering a range of coastal properties at Sharm el Sheikh and Hurghada with prices starting from £15,000 (€19,000) for a city centre unit, to large, three-storey villas and pool at circa £400,000 (€500,000) apiece. Most developers hold deposits in escrow in Britain, according to Conor Johnson of Right Move, and there are certain guarantees. Likewise, prices are quoted in sterling, he says, but at a fixed exchange rate which will favour the euro buyer.
Purchases in Hurghada, on the “mainland” of Egypt are freehold, whereas in Sharm el Sheikh, properties are only sold on a 99-year lease. An Egyptian will, passing on the property to one’s heirs, is the way around this, say Right Move.
Details: The Right Move Abroad Limited, Unit 3, St Olaves
Kinsealy, Co Dublin. 01-8666168.