Guides
We have created comprehensive guides on the popular property regions in Egypt.
A Guide to Egypt
Egypt is probably the world’s oldest civilization having emerged from the Nile Valley around 3,100 BC, historically. Egypt is probably one of the oldest vacation spots. Early Greeks, Romans and others went there just for fun, and to see the wonders of some of mankind’s earliest triumphs. But Egypt is much more than Pyramids and monuments. It is also Red Sea scuba diving, hot night spots, luxury hotels and five star restaurants.
It is romantic cruises down the Nile on festive river boats, a night at the grand opera and it is a cultural experience like none you have ever experienced. Egypt is a land bustling with life, sound, visual beauty and excitement. More than anything else, we want you to think of Egypt as fun. For thousands of years, it has been the playground of emperors and kings, and we hope you will take the time to find out why.
Egypt Weather Indicator
Since the property boom in Spain in the late 1980s, many people have been on the lookout for a holiday home in the sun as well as the next big real estate investments. Effective property investment requires much more than striking it lucky in one market. It’s about calculating risks and estimating growth and returns.The Egypt property market is gathering upstream momentem and riding on the success of an ever-growing tourist ecomomy. With great holiday and investment appeal, Egypician property today offers purchasers excellent potential.Egypt has witnessed strong tourism growth in recent years as the country has embarked on a targeted marketing campaign. As a result Egypt is now the number one medium haul destination from the UK. Tourists are drawn by the increase in high quality resort accommodation, direct flights from Europe, the world’s best diving sites, not to mention the 365 days of sunshine and the abundance of culturally significant attractions.
Egypt has once again succeeded in expanding the tourism industry, bringing in more tourists who stay longer and come back more frequently. 2007 saw more than a 22% increase in visitors to Egypt. Europe has remained the largest tourist markets for Egypt, with regulars such as Italians, Germans, French and British. All four countries made it on to the top ten most visiting countries for the second year running. Germany managed to keep its top spot as the highest visiting European country as well as taking the number one stop for the most tourist nights in Egypt.
Yet the greatest achievement of 2007 has been the massive expansion of the Eastern European market. Not only did Russia rank as the number one country in the world visiting Egypt, but newer faces such as Poland and Ukraine also made it into the top ten.
In Central Europe, the number of Czech Republicans and Austrians tourists increased by 26%. In Northern Europe, Egypt has also remained a favourite for Finnish (+18,9%), Norwegians (+35,2%) , Swedish (+14,1%) and Dani sh tourists
(+42,3%). In Asia, Indian and Chinese markets show good results with respectively 34,6% and 56,6% increase over 2006.
Reasons to Invest in the Egypt Property Market:
• Shortage of residential accommodation
• Excellent rental opportunity both long and short term
• A secure and constant income plus excellent capital appreciation
• World class dive sites
• Short flight from Europe
• Year round climate
• Low purchasing costs
• No capital gains tax
• Low maintenance fees
• No inheritance Tax Egypt continues to be a country for investments, especially in tourism.
Foreign investments reached a staggering 6.1 billion dollars (US) in the year 2005/2006. The estimated figure to the end of July 2007 is 8bn US $. The Ministry of Tourism’s objective is to increase visitor numbers from 9.1 million visitors to 16 million visitors by 2014.
In the last few years’ investments have amounted to 22 billion dollars (US) divided amongst various projects by many well known international developers.
Capital growth
Egypt is an emerging property market, which puts potential growth at its highest level for the shrewd investor. Property prices in Egypt remain incredibly low while an ever increasing tourist economy is a clear indicator that property prices in many areas will continue to rise at an unprecedented rate. In 2006 alone, annual growth rates of 20-30% were typical in the prime property locations such as the Red Sea, Sharm El Sheikh and around the residential satellites of Cairo.
Egypt has experienced very strong economic growth in recent years, a situation that continues even today, with 2005 growth in GDP of 4.5%, divided on a population growth of 1.8%.
Booming Market For Foreign Investment
The property market in Egypt currently sits on the brink of a boom period and now is a perfect time to purchase
property in Egypt.
While infrastructures are readily in place and prices are low, many investors are seeing an opportunity in the making. The imminent introduction of mortgage facilities to foreigners in Egypt will precipitate an increase in demand for property and prices will inevitably rise at an even greater rate than investors are already enjoying today. Property investment is expected to increase not only on the seaside tourist resorts, but also in cities such as Cairo, where a huge shortage of accommodation continues to be a problem waiting to be addressed.
In 2005 Egypt issued a decree (number 548) assisting non-Egyptians to invest in the tourist sector by abolishing a
number of red tape procedures and streamlining investment procedures, an uncomplicated tax system with no
inheritance or capital gains tax for foreigners are added incentives to Egyptian property purchase.Real estate investment still remains the most secure and profitable investment, compared to stocks and bonds.
It is a fact that property in the Red Sea has a very interesting return on capital. Some sources state, and we are witness to the fact, that after 2 years on certain residential resorts there has been an increase in value equal to 50%. Lets not forget that the fiscal laws in Egypt are paradise compared to Europe. A factor that is not to be underestimated and which is pushing more and more foreigners to purchase not only as a second or holiday home but as pure investment as well. There has also been a large increase in the demand for long term rentals which guarantee a stable annual income.
Tax on Rental Income
Any person, partnership or company must file a tax return detailing all rental or other income derived from real estate by March 31st of each year. For rental income the basic threshold for taxation is LE 5,000 per annum. Provided your rental income is less than this figure, you pay nothing and need not file a return.
For those with rental income greater than LE 5,000, 50% of the total amount is tax-free to cover maintenance and other expenses associated with owning the property. The balance is taxable at a standard rate of up to 20% rate of personal and corporate income. For example, you rent out a flat for LE 8,000 per month, grossing LE 96,000 in rental income per year. Simply subtract the deduction against costs of 50%, leaving LE 48,000 as taxable income.
The balance owed in taxes is LE 6,100.
Tax Payable From The Sale of Property
Under the current new laws, the sale of land and buildings is treated exactly the same and is simple. No deductions are made for the cost of sale. Simply take 2.5% of what is earned from the sale and report it as tax owed before April 1st. For example: Any person or corporation selling a piece of land for LE 100,000 must file a return with the Tax Authority by March 31st reporting that LE 2,500 is owed in taxes.
The only exceptions (under Article 42) are income from the sale of inherited land or other real estate is tax which are free, as is any income earned from the sale of land or other real estate you own through a shared capital company, provided you keep your shares in the company for at least five years after the sale. This last provision is designed to prevent the formation of “paper” companies to dodge tax liabilities from the sale of properties.
Note: Taxes on the sale of real estate bear no relation to property taxes or real estate registration fees. The Egyptian
government is currently debating a reform of property registration fees and is proposing to impose international- standard property taxes.
General Factors
Foreign property purchasers in Egypt see now as the time to enter the market while Egyptian property prices are suitably low, high potential returns on investment are in the offing. Target areas tend to be on the Red Sea resorts in preference to many other areas and this has been reflected in the impressive property price increase of around 25% per annum. In addition to Egypt’s natural beauty, homebuyers are also attracted by a low cost of living and excellent transport links to the UK. Today Egypt is a favourite holiday destination for those seeking the charm of a new culture, within a safe and luxurious environment.
Egyptian property investors rely largely upon the fast growing tourism sector and the fact that property prices remain low for now. With increased annual tourist numbers, property investors are identifying the Red Sea region as a great opportunity to buy up units on the best beach front locations, right at the beginning of the market while prices are low. Buy-to-let investments profit from the growing tourist industry and are seen as an excellent opportunity to maximize returns on investment. Second homes are equally popular as Egypt grows in popularity amongst the international jet set who regard Egypt as a highly appealing and exotic medium haul holiday destination. Property purchasers have been benefiting from the Egyptian government’s sweeping reforms designed to attract further inward investment and the country has seen a sharp increase in tourism in recent years. Last year Egypt received a record 8.6 million tourists and is experiencing growth of up to 60% from some Middle Eastern markets alone.