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28 June, 2016
Egypt has long been a popular property investment destination, thanks to its popularity with tourists and its excellent beaches. While the country has undeniably faced its share of challenges in the past few years, its property sector is proving relatively resilient and many investors continue to see the potential for opportunities in the Egyptian real estate market.
Are There Restrictions on Foreign Property Ownership?
Egypt does allow foreigners to buy properties, but it does place restrictions on what exactly overseas buyers can do in its property market. Overseas buyers need the approval from the Council of Ministers, and their intention must be for themselves or a family member to occupy the property. No foreigner can own more than two property assets in the country, and their total area cannot be more than 4,000 square meters.
How Difficult or Costly is the Purchase Process?
The buying process of properties for sale in Egypt is not exactly a nightmare, but it is certainly not a simple one either. The various fees incurred along the way are fairly high but not severe compared to alternative investment destinations. Egypt's property buying process as a whole is somewhat on the complicated side, and foreign buyers have some things to worry about that domestic ones do not. For example, as well as the need for approval from the Council of Ministers – something which usually takes about two months to obtain – there is the matter of registration to consider.
What is Registration?
Registering is the official and recognised method of transferring property ownership under Egyptian law. It carries a fee equal to 3% of the property's value, capped at EGP2,000. Registering a property is not compulsory, as alternatives exist, but a decision either way could have big implications. Not registering means that you have fewer and weaker protections, and requires following routes which lead to a long-term lease rather than true ownership. Registering, however, creates some restrictions which some investors may not be comfortable with. The money to purchase the property must be transferred into the country through one of a particular group of banks. After purchase, a registered property cannot be sold on or rented out until five years have passed, and after that period if it is rented then it must be offered furnished.
What About Sharm El Sheikh?
The luxury resort and key property market of Sharm El Sheikh is subject to different rules from the rest of Egypt. Foreigners have no right to purchase property there as freeholders, only to acquire 99-year leases. Those who wish to do so must undergo a process culminating in a “signature validity court verdict,” which grants them the closest thing that non-Egyptians can have to ownership of Sharm El Sheikh real estate. However, many investors prefer this method, and choose it over registration when investing in other parts of the country as well. As they are obtaining a 99-year lease rather than truly buying the property, investors who follow this route can rent out and resell properties when they choose, as well as bypass limits on the number of properties they can own.
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