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March 3, 2008

Property Investment in Egypt

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by Brian Turner

Egypt

Investing in the Egyptian Property Market

It has not been that long ago that the Egyptian property market fell on hard times. In 1997, there was a massive housing oversupply due to inexperienced companies jumping into a market that they didn’t understand. Many of the developers went bankrupt. It has take some time, and ten years of market adjustment, but the property industry is on the rise once again.

The growth in the Egyptian market is due largely to the growing economy. The Gulf region is seeing an influx in new oil money. Surprisingly, a drop in the currency value has actually encouraged expatriate Egyptians to make their way into the market.

Property prices have increased by as much as 50% over the last few years. The upward trend is expected to continue, but it will slow some. The projected increase over the next few years is only expected to be up around 20%.

The transaction costs in the Egyptian property market are low for the buyer. Typically it only cost around 4% of the purchase price. The registration fee (paid by the buyer) is capped at $350 US, but the process of registration is still drawn out.

Legal issues:

Foreigners are limited in the Egyptian property market. You are only allowed to own two pieces of property. Those properties can not exceed 4,000 sq m and the purpose must be to provide living space for family members.

The selling or renting of any property is also limited. Any purchase must be held for five years before it is eligible to be sold or rented. Even after five years, you must obtain permission from the Prime Minister to sell the property. If you do decide to rent the property, then it must be rented furnished.

An administrative decree in 2005 means that foreign purchasers do not acquire freehold rights but instead purchase a 99 year lease. You will have to follow a procedure known as ‘signature validity court verdict’ and other steps as well. This method could open up the opportunity for you to purchase as many properties as you would like and allow you to rent them or sell them with limited restrictions.

Obtaining property through the ‘signature validity court verdict’ means that you must acquire a local lawyer to act on your behalf and issue him power of attorney. In order to retain the lawyer you must first obtain a multi-entry visa. After that, the lawyer will file suit in court, a process that will probably take 6 to 8 months.


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