Egypt's real estate market catches global attention

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Egypt's real estate market catches global attention

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Egypt's real estate market catches global attention

Property News


Sam Zell, the property moghul who made billions in 2007 when he sold his Equity Office Properties (EOP) portfolio to Blackstone for $38 billion, recently shortlisted the top three property investment destinations - Brazil, China and (surprise!) Egypt.

After years of state-built housing, in the early 1990s, the Egyptian government allowed private housing projects. Soon, there was oversupply, developers went bankrupt, and from 1997 on there was a property crisis. Now the market is booming again.

House prices are rising strongly in Egypt. There are three key areas in Egypt - Cairo, Hurghada and Sharm Al Shaikh. Most appreciation has been in the new developments, such as New Cairo and in the new Red Sea projects.

Why Egypt?

For one, it is a tourism superstar. Traffic doubled between 2001 and 2006 and Egypt forecasts 13 million visitors in 2008, 19 per cent more than in 2007. Tourism and investment has been boosted by the free float of the Egyptian Pound in 2003, which suddenly made Egypt and Egyptian property much more affordable and popular. A benefit of tourism is that property investment for short-term rentals is a very viable proposition.

The incredibly low prices are another plus at an average of Dh220 per square foot. For prime residential property in a major city, comparable Middle East prices are Dh2,438 per square foot in the UAE, Dh760 in Lebanon, Dh536 in Morocco and Dh393 in Jordan. A new three-bedroom villa in New Cairo can cost Dh600,000. One-bedroom beachfront apartments in the resorts of Hurghada and Sharm el Sheikh go for average Dh150,000 and Dh260,000 respectively.

In 2001, the mortgage law was passed and this has ignited the mortgage market as banks can now repossess properties and evict defaulting owners. This has been positive for the property market.


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