Hurghada's Resale Market

[Home Buy Overseas]

Having had a conversation with West Side Village's team today, the subject of resale came up. I was asking about pre release prices and real market value and just how good investments are likely to be here. He made a valid point of stating that this will depend on other developments , ie what has the competative edge, be this finishes, location and price..

When do you think the resale market will kick in? Will these developments make decent money? Are the predicted figures realistic?


I am buying for investment but there is a sense of personal enjoyment for me as this is the first one. Ultimately though, i am wanting to make cash on this and then make more. The good thing is, in Egypt this can be done with low outlay. We could not achieve this easily in the UK..

Im not sure who the buyers of resale are likely to be and I question whether enough profit can be made to enable progression as an investor

Would be nice to here peoples thoughts

 

[Peter Mitry]

The Egyptian property market is in its infancy and has been likened to Spain 30 years ago. Even in the past two years in Egypt prices have doubled. With the projected growth in tourism coupled with the future availability of mortgages and cheaper flights, who can doubt that Egypt is a great place to invest. But the old rules apply; marina, front line beach, facilities will all add value.

 

[Home Buy Overseas]

yes i agree

i am rather drawn to the bigger developments i must say!! the one i mentioned really appeals to me due to its positioning within the marketplace.

im keen to take a speculative punt but there is no compromise on contract stage payment .. for that sort of finish and facility .. 19964 seems to be a steal ..

 

[awahee123]

I think it is too early to talk about resale property,admittedly it won't be far off, as many of the larger developments come to nearing handover to their eager owners.
Hopefully all resellers will make a handsome profit,however catch 22 it will only be any good if you decide to pull out and take your profit,buying a similar property to the one you have just sold for the money you have just received may be a little harder just for now.
For those flippers they may be in their villas quicker then they anticipated.

 

[Home Buy Overseas]

I think it is too early to talk about resale property,admittedly it won't be far off, as many of the larger developments come to nearing handover to their eager owners.
Hopefully all resellers will make a handsome profit,however catch 22 it will only be any good if you decide to pull out and take your profit,buying a similar property to the one you have just sold for the money you have just received may be a little harder just for now.
For those flippers they may be in their villas quicker then they anticipated.

i would not be aiming to sell straight away. i realise that midterm would be good. my only fear is that what i hope to achieve would not be possible as prices are shooting up. thats why i really want another now whilst prices are low.

 

[MrSkipsey]

Im hoping that if all goes well on my first one I will be able to get a few more 'under my belt' before the 'hype' kicks in.

One thing I will do is just put money away as I am really interested in Gamsha Bay if it ever goes ahead!
If the studio apartment I have reserved goes to plan then I will one day live in it (Just me and maybe my girlfriend - no kids involved) and in the mean time rent it to close friends and family!

 

[awahee123]

I think everybody knows for a lot of buyers it is probably getting borderline to what is affordable without a mortgage,so until mortgages kick in there could be a lull.
What I have noticed a lot of the newer developments are now offering interest free payments over a few years so this will help.
I really do not think Egypt will have the same pull as Spain has had in previous years but it is certainly a very attractive option both for buyers who are looking for a holiday home or investors.
Whatever route you may choose and whatever development you all buy in, you will have made a good decision to invest in Egypt.That's all that matters.

 

[crombiestone]

Im hoping that if all goes well on my first one I will be able to get a few more 'under my belt' before the 'hype' kicks in.

Having bought 3 years ago I think the "hype" has already kicked in . I am sceptical that Egypt will ever be a mainstream destination as its quite different to the norm . The property market in Hurghada has gone mad this year ,whether its sustainable I just don't know.I suppose that's the big risk that might bring big profits ?

I personally think Egypt is more of a lifestyle destination and if you like it then great. I think of my place as a second home and I am considering moving out permanently,I'm not too bothered about profits .

 

[MrSkipsey]

Crombie,...I agree with you about the lifestyle. Ive been to Egypt a few times and absolutley love it.
At 29 years old Im already thinking of when I can sod off and live out there. Just finish my diving and become an instructor! Failing that If Brits can get bar work then Id be happy to do that for the rest of my life or a few hours a day in MacDonalds or KFC would suit me fine. Just enough to cover bills and food!!!

Why stress it here in the Uk when I can lounge it in Egypt at a fraction of the cost!?

 

[Mark .Y.]

Having bought 3 years ago I think the "hype" has already kicked in . I am sceptical that Egypt will ever be a mainstream destination as its quite different to the norm . The property market in Hurghada has gone mad this year ,whether its sustainable I just don't know.I suppose that's the big risk that might bring big profits ?

I personally think Egypt is more of a lifestyle destination and if you like it then great. I think of my place as a second home and I am considering moving out permanently,I'm not too bothered about profits .

I agree Crombie. I too am sceptical that Egypt will become a mainstream market - certainly not in the next 5-10 years. My two key reasons for this are the different culture which certainly does not appeal to everybody and the length of flights involved. 5 hours or so really is quite a long time and around twice as long as Southern Spain. These could change in the long-term of course, in particular a new breed of faster passenger aircraft could be with us in 5-6 years time.
I think the key (no pun intended) for property purchase in Egypt is to ensure you are going to make use of it yourself so you at least get enjoyment out of it. Then, if you do not make a large capital gain (which for UK citizens would of course be potentially taxable) you will still have enjoyed your purchase.
I still do think though that many on here who have paid around the £25K mark and below for their properties have got good buys and will do OK, I just fear a little for those who have paid around the £70K mark for 2 bedroom type apartments as I think there is very little leeway for capital growth at that price.
As a different offering, I remember reading about some properties in (I think)
Ain Soukhna (sp?) which was about an hours drive from Cairo.
If capital gain is your key aim I would think that they would be good because as a Country becomes richer it tends to emanate from the capital and if you were to get a new breed of well-off entrepreneurs they might well be looking for a place on the beach for weekend family use.

Mark .Y.

 

[distant dreamer]

Hi everyone,

Well we bought a resale, so the market does exisit!!! We didn't want to wait 2 years for the build time in El Gouna, so puchased a small apartment over 2 years ago now. The owner made a massive profit, about 3 times more than what he paid a few years earlier I think. But of course, he was staying in El Gouna, so obviously everything else had gone up accordingly, but if he'd been an investor I guess he would have been very happy with that.

Also I know someone that has bought a flipped apartment in Sahl Hasheesh already. The original owner made a handsome profit through getting in at the very beginning and just holding it for several months.

If you want to make money the key is to get in on release and take your chances. I learnt the hard way - if I'd bought in El Gouna in 2001, we could have afforded a detached 3 bedroom lagoon front villa, but a few years later our budget could only run to a small 1 bed apartment! Thats why when I heard about Sahl Hasheesh, we bought site unseen, as I was convinced it would be a brilliant development. If you do your homework thoroughly and go for the best apartment in the nicest development you can afford, I'm pretty sure there will be good money to be made over time.

 

[Peter Mitry]

Distant Dreamer is right; whatever happens in any market in the medium to long term property prices go up. As we all know, in the short term there can be glitches, like in Spain at the moment, but no one can doubt that the trend will always be upwards and will always outperform bank rates. The caution is not to get in the trap of needing the money during a market correction. Hang on and you will see handsome returns. This applies particularly in Egypt as most people are buying with cash and not fighting to service a mortgage.

 

[redangel7861]

The term " the next Spain" is used commonly and should be used with caution. Many people are saying the same thing about Morocco which I believe is more comparable to Spain in terms of the Medeteranian climate also the major Spanish developers and constuctors have moved away from the Spanish market into the more lucrative Moroccan market (Fadesa being an example). Because of its locality ie. close to Europe many Spanish, Uk, Irish and French investor are buying in Morocco, also EMAAR the giant Dubai construction company is building luxury resorts from the Northern coast of Tangiers to the mountain ranges of the Atlas mountains 40 minutes from Marrakech. So the term "next Spain" should be used wisely as Egypt is very different from Spain and in my opionion Morocco has more potential of being the "next Spain" due to it's climate and location.

Egypt, on the other hand is a good investment for other reasons (comparing it to Spain is not one of them). The benefits of investing in EGYPT:

1. Mortgage market in it's infancy;
2. Increase of low cost carrier flights;
3. No CGT or inheritance tax;
4. Prices are still very cheap (even after the recent rises) when compared to the rest of the developing or developed Arab Nations. Prices in Egypt will rise in the next few years so they will be comparable to these other areas;
5. GDP was 7% in Egypt last year which is healthy economic growth;
6. Stable economy
7. Government is actively encouraging foreign investment;
8. Dubai based construction companies are looking to develop exclusive resorts North of Hurghada and in Cario.

The term "Similar to Spain 15 years ago" is used too often and mainly by agents who tend to simplify there investment criteria to potential clients. NO, Egypt will not be like Spain but will be like Egypt because it has it's own unique set of criteria that makes it a worth while area to invest in.

As an investor one must always look at the Micro and Macro economic factors that will effect the growth of a country and not simplify it with such basic terms.


Regards

RED

 

[Peter Mitry]

An excellent assessment Red; when you are not upsetting Bob you are an asset to the forum!

 

[redangel7861]

Peter I think I'm gonna cry

An excellent assessment Red; when you are not upsetting Bob you are an asset to the forum!

Peter, stop being nice it un-nerves and makes me just a little tearful (LOL).

Regards
RED

 

[Peter Mitry]

Don't Cry Red!

I am ALWAYS nice its only others who are nasty to me!! Ask my wife (Oh perhaps better not!)

 

[realestatemart]

Hi everyone,

Well we bought a resale, so the market does exisit!!! We didn't want to wait 2 years for the build time in El Gouna, so puchased a small apartment over 2 years ago now. The owner made a massive profit, about 3 times more than what he paid a few years earlier I think. But of course, he was staying in El Gouna, so obviously everything else had gone up accordingly, but if he'd been an investor I guess he would have been very happy with that.

Also I know someone that has bought a flipped apartment in Sahl Hasheesh already. The original owner made a handsome profit through getting in at the very beginning and just holding it for several months.

If you want to make money the key is to get in on release and take your chances. I learnt the hard way - if I'd bought in El Gouna in 2001, we could have afforded a detached 3 bedroom lagoon front villa, but a few years later our budget could only run to a small 1 bed apartment! Thats why when I heard about Sahl Hasheesh, we bought site unseen, as I was convinced it would be a brilliant development. If you do your homework thoroughly and go for the best apartment in the nicest development you can afford, I'm pretty sure there will be good money to be made over time.

You madethe right choice distant dreamer you bought in one of the most hotspots which willbe realyamaizing and its price willbe up and up incoming period i just was there today

 

[Mark .Y.]

The term " the next Spain" is used commonly and should be used with caution. Many people are saying the same thing about Morocco which I believe is more comparable to Spain in terms of the Medeteranian climate also the major Spanish developers and constuctors have moved away from the Spanish market into the more lucrative Moroccan market (Fadesa being an example). Because of its locality ie. close to Europe many Spanish, Uk, Irish and French investor are buying in Morocco, also EMAAR the giant Dubai construction company is building luxury resorts from the Northern coast of Tangiers to the mountain ranges of the Atlas mountains 40 minutes from Marrakech. So the term "next Spain" should be used wisely as Egypt is very different from Spain and in my opionion Morocco has more potential of being the "next Spain" due to it's climate and location.

Egypt, on the other hand is a good investment for other reasons (comparing it to Spain is not one of them). The benefits of investing in EGYPT:

1. Mortgage market in it's infancy;
2. Increase of low cost carrier flights;
3. No CGT or inheritance tax;
4. Prices are still very cheap (even after the recent rises) when compared to the rest of the developing or developed Arab Nations. Prices in Egypt will rise in the next few years so they will be comparable to these other areas;
5. GDP was 7% in Egypt last year which is healthy economic growth;
6. Stable economy
7. Government is actively encouraging foreign investment;
8. Dubai based construction companies are looking to develop exclusive resorts North of Hurghada and in Cario.

The term "Similar to Spain 15 years ago" is used too often and mainly by agents who tend to simplify there investment criteria to potential clients. NO, Egypt will not be like Spain but will be like Egypt because it has it's own unique set of criteria that makes it a worth while area to invest in.

As an investor one must always look at the Micro and Macro economic factors that will effect the growth of a country and not simplify it with such basic terms.


Regards

RED

Whilst I agree with a lot of your post Red, points 2 and 3 should be clarified:

2. I assume you mean a "hoped for" increase in low cost carrier flights. I am not aware of any low cost carrier flights to any destination over about 4 hours from the UK. I think (but this is only guessing) that the budget airlines have problems with their business models over longer distances (hence not flying cheaply to the US).

3. My favourite bugbear - for UK domiciled citizens, both CGT and Inheritance Tax (should you become liable to it) is payable on your worldwide assets including, surprise surprise, those in Egypt. Not something the agents like to mention. They prefer to tell you there is none of those taxes in Egypt which may be true but is completely irrelevant to "normal" UK citizens which we find on this forum.


Mark .Y.

 

[Watson]

My personal thoughts are that resorts like Hurghada will be very popular within the next 5 years due to the fact that if the big boys keep moving in.

In regards to food outlets and nightclub chains McDonalds,KFC, Burgerking(new) and Ministry of Sound Nightclub these are shrewd companies and do not setup for the fun of it.

They expect the resort to build and build and this will certainly push the property market and the rental side.

I am giving it 5 years bought 2 places in Desert Pearl so will reaccess then and also see what the property prices are like then

 

[redangel7861]

Whilst I agree with a lot of your post Red, points 2 and 3 should be clarified:

2. I assume you mean a "hoped for" increase in low cost carrier flights. I am not aware of any low cost carrier flights to any destination over about 4 hours from the UK. I think (but this is only guessing) that the budget airlines have problems with their business models over longer distances (hence not flying cheaply to the US).

3. My favourite bugbear - for UK domiciled citizens, both CGT and Inheritance Tax (should you become liable to it) is payable on your worldwide assets including, surprise surprise, those in Egypt. Not something the agents like to mention. They prefer to tell you there is none of those taxes in Egypt which may be true but is completely irrelevant to "normal" UK citizens which we find on this forum.


Mark .Y.

Mark, I believe that Easyjet are planning to fly to Hurghada airport very soon (they may have already started). I also believe that other low cost carriers are considering flying to Hurghada as it's a growing market.

With regards to the Tax issue you make a valid point. But unlike other countries there is no VAT charge on off plan property.

I do however agree that other countries such as Morocco have better taxation rules ie. they have a double tax treaty rule with the UK where CGT is only payable once in Morocco (20% if you sell 1-5 years, 10% is you sell 5-10 years and 0% if you sell after 10 years). Also as there is a double tax treaty agreement with the UK no inhetritance tax is payable both in Morocco and the UK.

The Egyptian authorities should go along the same lines and introduce a double tax treaty rule with the UK and say charge 5% or 10% CGT only which will be payable only once in Egypt and then no tax payable in the UK