| International investments |
Properties in Egypt
KEY PROPERTY INVESTMENT FACTS Mr. Robert B. Zoellick, Deputy Chairman for International Affairs of Goldman Sachs Group, Inc., the Wall Street- based international investment bank said “There is global interest in Egypt’s promising investment opportunities.”
Capital growth Egypt is a new emerging market for international property investors, which puts potential growth figures at their highest at present for timely investors. Property prices in Egypt remain 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 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. Low Cost of Living The cost of living in Egypt is far lower than in most European countries. As a result, the cost of maintaining and managing your property is very low and this reinforces the belief that Egypt is increasingly popular amongst foreign property purchasers. Economic Expansion The government of Egypt is committed to transforming the country’s economy through the promotion of foreign direct investment over the long term. As a consequence, it has recently introduced new reforms to customs, income and corporate taxations, while privatizing certain sector industries, and developing an export market for their natural gas deposits. Experts agree that all these efforts should improve the economy of the country, create more opportunity for employment and domestic wealth growth while increasing the attraction of Egypt for overseas investors. Growth in the tourist industry netted 2.5 million tourists in 2005, representing 6% of GNP. This figure is set to rise with growing introduction of luxury purpose built resorts throughout the country. Egypt Investment Growth Egypt has long been a popular travel destination. Today, due to encouraging economic trends, the property market in Egypt is becoming more popular as a location amongst worldwide purchasers and recent years have seen a growth rate of an encouraging 20-30% per annum in some key locations. Property investment in Egypt, as in many emerging markets, relies heavily on the success of Egypt’s ever increasing tourism industry. Beautiful, well established tourist hotspots are already in existence, particularly along the Red and Mediterranean Sea coasts and cater for a wide variety of modern tourist requirements, from excellent diving and snorkelling, five star hotels and golf courses to cultural and historical activities. New off-plan opportunities from heavy weight international developers are now springing up, attracting overseas investors looking for a secure investment with good growth potential at rock bottom prices. Due to increased tourist numbers, these buyers are also safe in the knowledge there will be a strong market for their investment. Furthermore, the imminent opening of the newly modernized Cairo international airport in early 2007 is set to bring a new influx of visitors to complement Egypt’s new look 21st century tourist industry. Egypt’s Prime Minister, Ahmed Nazif is concentrating on the country’s potential as a promising investment hub, especially in major infrastructure sectors, which will inevitably have a direct result on the attraction of Egypt to foreign investors. During the Middle East Travel and Tourism Summit of 2006 in Jordan, Munir Nassor told more than 400 leaders from the international tourism industry that Egypt and the Middle East as a whole can expect to attract new investment in the hotel, spa and airport sectors. He added, “The cooperation we’ve had so far between private and public sectors is giving the right kind of push forward”. Due to recent reforms to streamline purchasing procedures in Egypt, the country now attracts more overseas property purchasers than ever before. This can also be put down to its relatively simple purchase system with lower taxes than in many other countries and no capital gains or inheritance tax. Capital Growth Predictions Based on a steady increase in investments in the tourist sector and a resulting surge in visitor numbers, Egypt offers promising growth potential to all types of investors, while some areas of the Red and Mediterranean Sea coasts as well as certain areas of Cairo and Alexandria, are currently attracting as much as 25% annual capital growth. Investment in Egyptian property is offering great opportunities for purchasers while it waits during the infancy of an exciting emerging market. Rental Yield Predictions Rental income from Egypt based property is of great interest to investors as high rental yields are already achievable from property located in the current tourist hotspots. It is expected that mortgage payments and bills can be covered for the year from the rental income achieved. A fantastic year-round climate attracts a reliable tourist trade throughout the year. Egypt Economy Egypt’s economy is undergoing steady growth and in the last quarter of 2005, the annual growth rate in Egypt has risen for the first time to 6.1% and inflation dropped dramatically from a huge 18.1% in 2004 to only 3.1% in 2006. Due to a number of economic reforms, private business has increased to represent some 80% of the economy today. Experts agree that the current economic climate should improve the economy of the country, create more opportunity for employment and domestic wealth growth, and increase the attraction of the country from an overseas investor’s point of view. With direct foreign investment continuously on the up, Egypt’s economy shows enormous potential over the long term. There are no restrictions on foreigners purchasing property in Egypt. In 2005 the Prime Minister of Egypt issued a decree number (548). This decree was issued to help encourage non Egyptians to invest in the growing tourist areas. TAX INCENTIVES 1.NO STAMP DUTY Property Tax Today, taxes on the sale of real estate bear no relation to standard property taxes or real estate registration fees in other countries. The Egyptian government is currently debating a reform of property registration fees and is proposing to impose international-standard property taxes. Tax from the Sale of Property In Egypt, the sale of land and/or buildings is taxed in the same way and the system is very simple. Tax is chargeable at 2.5% of money earned from a sale and it must be filed as tax owed by April 1st. For example: an individual or corporation selling a piece of land for LE 100,000 must file a tax return by March 31st stating 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 Stamp Duty / Capital Gains Tax / Inheritance Tax In Egypt there is no stamp duty or capital gains tax payable on real estate and, if you are a British resident, you will also avoid inheritance tax on any Egyptian properties that you decide to pass on to your loved ones Tax on Rental Received Any person, partnership or company must file a tax return detailing all rent 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 and, provided your rental income is less than this figure, you need not declare your received income. For rental incomes 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. TOURISM IN EGYPT Tourism in Egypt has witnessed rapid growth during the last decade. With a share of around 25% of the Middle East tourism market, Egypt is experiencing a tourism growth rate of 10%, higher than the world average of 7%. In 2000, international tourist arrivals reached 5.5 million, a growth rate of 14.8% from 1999. This growth is reflected by an increase in international tourist nights, international tourist receipts, hotel occupancy levels, and hotel capacity, particularly in the Red Sea and South Sinai areas. Nearly 9 million foreign tourists visited Egypt in 2005, the highest number ever. This means that incoming arrivals increased by more than 57% over the review period. TOURISM FACTS Egypt 2020 Vision
*(Source: Ministry of Tourism) |
 Quick links |
