Peter Mitry
<B>Egypt Forum Founder Member</B>
Wednesday, June 23, 2010 a Blog by Peter Mitry, Founder member of the Egypt section of Property Community, CEO of the Property Shop Inc and a Director of Egypt Real in Hurghada.
The Treasures of Modern Egypt 2010
It is almost a year since I published my Blog on Buying Property in Egypt 2009 and as the world financial crisis has escalated it is time to reflect on how Egypt's rapidly growing property market has evolved.
Of course the market has changed; many investors and lifestyle buyers who have previously relied on borrowing against rising property values in Northern and Eastern Europe have found sources of financing drying up as banks take a tougher stance on borrowing.
In many parts of Europe this has had a catastrophic impact on the property market and all of those trades associated with it.
Not so in Egypt where traditionally the property market has never been financed by debt; most people buying here know that at best they may get Developer funding over the period of building a new project. This is normally restricted to an interest free loan over two to three years.
A few Developers, anticipating a slow down in sales, have introduced innovative low cost loan schemes over up to seven years at favorable levels of interest.
At the upper end of the market, where sales have slowed due to lack of finance on existing property at home, Developers have in some instances held off on planned price increases and in a few cases actually reduced prices or 'added value' by including extras such as air conditioning, kitchens and guaranteed rental schemes.
However a new and even more exciting phenomena has evolved; many Developers who in recent years have been forcing up prices by blaming the high cost of steel, land and cement have found themselves releasing land bought from the government at very low prices in the recent past and which they were hoping would bring rich rewards as prices escalated.
This land is now being used for new projects which in some cases are being offered for a finished price as little as £240 per m2! Just a year ago the lowest prices for new build property was closer to £500 per m2.
The significance of this is highlighted by a recent report by International Estate Agents Savills who published the top 35 locations worldwide in terms of price per m2. The report featured Cairo, Egypt as offering the cheapest property at 1425 Euros per m2, closely followed by Marrakech at 1425 Euros per m2; the cheapest coastal property was said to be in Mahe in the Seychelles at 2460 Euros per m2!
Had the search gurus done their homework a little more thoroughly they would have found in fact that Hurghada on Egypt's Red Sea coast is offering freehold Five Star, frontline beach property on the Red Sea from as little as 900$ per m2! Even the World Class resort of Sahl Hasheesh has frontline properties from only 1450$ per m2.
Both of these resorts are to be run by internationally renowned Swiss Hotel chains to a standard comparable with the best in the world
At the lower end of the market it is amazingly still possible to buy a studio apartment, fully finished, in a development with 24 hour security, lifts to all floors and a swimming pool for just £6000, yes six thousand pounds! This buys a 29m2 studio and is just £207 per m2.
There are many cases like this and yet incredibly Hurghada is only five hours from most European cities, has a year round season, guaranteed sunshine, almost zero rainfall, incredibly friendly people and the lowest cost of living of any of the popular holiday destinations.
Add this to the crystal clear warm waters of the Red Sea, amazing coral reefs and a rich cultural history and the reasons for investing in Egypt are even more compelling.
It is true that in the recent past few properties in Egypt are 'registered' in the accepted sense but make no mistake, the established system of purchase through 'court validation' is totally safe providing prospective purchasers follow the generally accepted best practice:
• Always use an agent who has independently verified the Due Diligence on a project
• Always use a respected local lawyer (use the internet or forums to find the good guys)
• Ask your lawyer to check the financial status of your developer (does he have the funds to finish the project if sales dry up)Always insist on receipts for all money paid
• Check progress of Development before releasing each stage payment
• Insist on penalty clauses for late completion
• Ask your lawyer to get a 'money back guarantee' if your project is more than 6 months late completing
Most Developers may not offer these safeguards but a good local lawyer can often get the amendments requested.
In a number of cases full registration is possible with the recently introduced equivalent to the UK land registry but unfortunately the procedure for obtaining it is onerous; the building has to be completely finished and registered by the Developer first before individual owners can apply to register. The process can then take another year as International security screening is required for owners and the legal costs can be up to 2000 Euros.
Owners will also find that with full registration, referred to locally as a 'green contract', they are restricted to owning just two properties in Egypt and are prohibited from selling their property for five years from the date of registration.
With costs escalating in Eurozone countries many lifestyle buyers are finding it hard to make ends meet and are looking to Egypt and to the Red Sea coast in particular to make a new start; young couples are moving here in increasing numbers and older people are attracted by the safe environment, low crime rate, low cost of living and the many health benefits from the dry climate. Humidity is generally very low which has significant benefits for those suffering from arthritis or rheumatic complaints.
My company, Egypt Real, have been at the forefront of ensuring best practice in the real estate markets; our own renowned property lawyers check the due diligence on every new project and until they are satisfied we will not offer to our client base.
Like in all emerging markets Egypt has had it's share of rogue developers who have disappeared with clients hard earned cash but our policy of thoroughly validating the published due diligence has meant that we have managed to avoid dealing with most of them.
Investors and lifestyle buyers alike should take a closer look at Egypt; throughout the current world downturn capital growth rates have remained above 20% per annum and the relatively high rental returns on comparatively cheap properties ensures return on investment between 15 -20% per annum on a well managed portfolio.
If anyone reading this would like further advice then please email me on [email protected] or visit our website on: Egypt Real | Specialists in Egypt's Red Sea Riviera Real Estate and Hurghada Property | Home.
Posted by Peter Mitry at 1:04 PM
The Treasures of Modern Egypt 2010
It is almost a year since I published my Blog on Buying Property in Egypt 2009 and as the world financial crisis has escalated it is time to reflect on how Egypt's rapidly growing property market has evolved.
Of course the market has changed; many investors and lifestyle buyers who have previously relied on borrowing against rising property values in Northern and Eastern Europe have found sources of financing drying up as banks take a tougher stance on borrowing.
In many parts of Europe this has had a catastrophic impact on the property market and all of those trades associated with it.
Not so in Egypt where traditionally the property market has never been financed by debt; most people buying here know that at best they may get Developer funding over the period of building a new project. This is normally restricted to an interest free loan over two to three years.
A few Developers, anticipating a slow down in sales, have introduced innovative low cost loan schemes over up to seven years at favorable levels of interest.
At the upper end of the market, where sales have slowed due to lack of finance on existing property at home, Developers have in some instances held off on planned price increases and in a few cases actually reduced prices or 'added value' by including extras such as air conditioning, kitchens and guaranteed rental schemes.
However a new and even more exciting phenomena has evolved; many Developers who in recent years have been forcing up prices by blaming the high cost of steel, land and cement have found themselves releasing land bought from the government at very low prices in the recent past and which they were hoping would bring rich rewards as prices escalated.
This land is now being used for new projects which in some cases are being offered for a finished price as little as £240 per m2! Just a year ago the lowest prices for new build property was closer to £500 per m2.
The significance of this is highlighted by a recent report by International Estate Agents Savills who published the top 35 locations worldwide in terms of price per m2. The report featured Cairo, Egypt as offering the cheapest property at 1425 Euros per m2, closely followed by Marrakech at 1425 Euros per m2; the cheapest coastal property was said to be in Mahe in the Seychelles at 2460 Euros per m2!
Had the search gurus done their homework a little more thoroughly they would have found in fact that Hurghada on Egypt's Red Sea coast is offering freehold Five Star, frontline beach property on the Red Sea from as little as 900$ per m2! Even the World Class resort of Sahl Hasheesh has frontline properties from only 1450$ per m2.
Both of these resorts are to be run by internationally renowned Swiss Hotel chains to a standard comparable with the best in the world
At the lower end of the market it is amazingly still possible to buy a studio apartment, fully finished, in a development with 24 hour security, lifts to all floors and a swimming pool for just £6000, yes six thousand pounds! This buys a 29m2 studio and is just £207 per m2.
There are many cases like this and yet incredibly Hurghada is only five hours from most European cities, has a year round season, guaranteed sunshine, almost zero rainfall, incredibly friendly people and the lowest cost of living of any of the popular holiday destinations.
Add this to the crystal clear warm waters of the Red Sea, amazing coral reefs and a rich cultural history and the reasons for investing in Egypt are even more compelling.
It is true that in the recent past few properties in Egypt are 'registered' in the accepted sense but make no mistake, the established system of purchase through 'court validation' is totally safe providing prospective purchasers follow the generally accepted best practice:
• Always use an agent who has independently verified the Due Diligence on a project
• Always use a respected local lawyer (use the internet or forums to find the good guys)
• Ask your lawyer to check the financial status of your developer (does he have the funds to finish the project if sales dry up)Always insist on receipts for all money paid
• Check progress of Development before releasing each stage payment
• Insist on penalty clauses for late completion
• Ask your lawyer to get a 'money back guarantee' if your project is more than 6 months late completing
Most Developers may not offer these safeguards but a good local lawyer can often get the amendments requested.
In a number of cases full registration is possible with the recently introduced equivalent to the UK land registry but unfortunately the procedure for obtaining it is onerous; the building has to be completely finished and registered by the Developer first before individual owners can apply to register. The process can then take another year as International security screening is required for owners and the legal costs can be up to 2000 Euros.
Owners will also find that with full registration, referred to locally as a 'green contract', they are restricted to owning just two properties in Egypt and are prohibited from selling their property for five years from the date of registration.
With costs escalating in Eurozone countries many lifestyle buyers are finding it hard to make ends meet and are looking to Egypt and to the Red Sea coast in particular to make a new start; young couples are moving here in increasing numbers and older people are attracted by the safe environment, low crime rate, low cost of living and the many health benefits from the dry climate. Humidity is generally very low which has significant benefits for those suffering from arthritis or rheumatic complaints.
My company, Egypt Real, have been at the forefront of ensuring best practice in the real estate markets; our own renowned property lawyers check the due diligence on every new project and until they are satisfied we will not offer to our client base.
Like in all emerging markets Egypt has had it's share of rogue developers who have disappeared with clients hard earned cash but our policy of thoroughly validating the published due diligence has meant that we have managed to avoid dealing with most of them.
Investors and lifestyle buyers alike should take a closer look at Egypt; throughout the current world downturn capital growth rates have remained above 20% per annum and the relatively high rental returns on comparatively cheap properties ensures return on investment between 15 -20% per annum on a well managed portfolio.
If anyone reading this would like further advice then please email me on [email protected] or visit our website on: Egypt Real | Specialists in Egypt's Red Sea Riviera Real Estate and Hurghada Property | Home.
Posted by Peter Mitry at 1:04 PM
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