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The Egyptian Government is committed to facilitating overseas investment and
making it as easy as possible for non-residents to invest in property. For
example, capital gains tax has now been reduced to nil and overseas investors
can now secure the freehold of any property without restriction. .Stamp duty has
been changed last month to a fixed nominal value of £e 2000 (€270) irrespective
of the purchased property price. As a result, the economy has shown impressive
year on year growth.
The property registration system which is still outdated in Egypt is now
in its final stage of reform and the new system is just about to be born
at any time within the next few months. When this happens Egypt will
witness unprecedented boom not only in the property market but wide
across the board in all economic sectors. The Egyptian government seem
to be very determined to reform the mortgage system as they did with CGT
and STAMP DUTY and the income tax.,
Tourism in particular has been a specific focus of a government
determined to ensure attractive returns for those investing in this fast
growing sector.
For example, the American Chamber of Commerce Egypt has announced a
likely growth rate of 7.2% by the end of 2007, partially driven by a
significant increase in direct foreign investment to a figure of almost
$7.5 billion per annum. Such independent analysis confirms what astute
investors have known for some time – that Egypt is a rich source of
potentially significant investment gains across the entire economic
spectrum.
Overall
attractive points about Egypt are:
1. Low entry investment
2. Continuous Property Capital Growth 20% pa
3. No Capital Gain Tax.
4. Nominal Stamp Duty (270 Euro irrespective of the property price )
5. Free hold property
6. High Rental Yield powered by both local and tourist tenants.
7. Very expected imminent second boom when the mortgage system is in
full swing.
8. Egyptian pound is liked to US dollar.
9. Free fund transfer in or out of the country via all the world known
bank branches
10. Top of the list world country of economic reforms
11. Very stable political country
The Egyptian Property Boom
Since the start
of 2004, the Egyptian property market is experiencing constant steep
rise in property market both in residential and touristic zones.
According to
analysts this seemed to be fuelled by the:
1. Increase influx of foreign investment money to Egyptian market
especially from the gulf countries, secondary to accumulated wealth
caused by increase oil prices.
2. Massive shake up of the Egyptian investment legislations by
aggressive economic reforms.
As a result, Direct Foreign Investment in Egypt, which in layman’s
term means foreign investors money brought to Egypt had surged from
4 billion US$ in 2004 to 7 billion US$ in 2006. Most of this money
were invested in high tech and telecommunication and industrial
projects which in turn had increased the purchasing power of the
average Egyptian buyers adding to this increased interest among
Arabs and westerns in the Egyptian tourist and residential
properties due to the very modern and up market resorts appeared in
the market also the government decision to give free hold property
to foreign purchasers. The final result was sudden increase in
property demand in the Egyptian local market with a much less
limited supply of property
It is constantly reported in many independent economic reports that
last year average gain in the Egyptian property market was between
20-40% depending on the location. After the government passed the
mortgage law in 2004, there was a strong and solid feeling among all
the investors in Egypt that it is now the time to buy before the
price surge that will be expected when the financial institutions
starts to offer property finance in the local market for the first
time in the Egyptian history, again that heated the market even
further . Yet another 2 reformed legislations were passed recently…
one to abolish stamp duty and rectify the property registration fee
to be capped at max of £e2000, (€260) and simplifying the
registration process to 120days, the second one to abolish the death
succession tax completely down to Zero. Minding you that in the new
Egyptian Tax Law, there was no more CGT in Egypt. All of these
factors seem to be constantly pushing the property market up in a
country of 79 million people most of them are still thriving to buy
their first home whenever the mortgage system start to work.
Report
Published 9 October 2007
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