Published on 13 January 2006 at 12:25 pm
Filed under: Middle East:- Egypt Property Guides » Egypt Property Buying Process
As a foreign investor you have the right to own real estate and land in Egypt, but unfortunately the property registry in Egypt is out of date, incomplete and many believe only 10% of properties in Egypt are actually registered - naturally this creates a problem for the property investor.
However, the majority of real estate investment interest is focused on the main cities and resort areas in Egypt and these are far more geared up to the international property market. Furthermore the Egyptian government is committed to attracting foreign investment into many sectors including the real estate sector therefore the path is being eased for investors all the time. This is our guide to the property buying process in Egypt for real estate investors.
Hernando de Soto, the president of the Institute of Liberty and Democracy, recently issued a report that explains why so few properties are officially registered in Egypt; according to his research the legal process to acquire permission to build property and then officially acquire the title deed to the land on which the property has been built requires no less than 77 bureaucratic procedures at 31 different agencies and it can take anywhere between 6 and 11 years. This has ensured that only 10% of properties in Egypt are officially registered.
If you then add to this the fact that the property registration fee until very recently was 12% of the property’s net value (it’s now 3%) you can see just how expensive and time consuming following the correct legal channels can be in Egypt and you can realize why so few properties have been registered and have title deeds. As stated the government of Egypt under Prime Minister Nazif is working hard to promote investment incentives and make things like the freehold ownership of real estate in Egypt easier to acquire for foreign investors. As the procedures improve so the appeal of the country increases and so property prices increase in direct relation.
An investor who buys into this emerging property market now may well be buying into a prolonged period of growth which is the exact appeal of Egypt from an investor’s perspective. A real estate investor contemplating the purchase of undeveloped land or older, well established resale properties will need to employ a lawyer specializing in real estate law in Egypt to assist with any such purchase to ensure the transaction is conducted legally and that at the end of the property buying process the investor is the legitimate owner of the real estate and can seek to have it registered in his name and acquire the deeds to the real estate.
An investor requiring a mortgage to purchase property in Egypt may like to secure this outside of the country - alternatively mortgage law in Egypt has recently improved and investors and foreign buyers do have access to mortgage products in Egypt now. However, the real estate they are seeking to purchase has to be registered at the property registry for the mortgage company to consider it. To be eligible for home finance an investor will need to fund no more than 85% of the property purchase price and be able to repay within either 20 or 30 years.
Those considering investment property in Egypt would be wise to employ an estate agent to assist them with their search, negotiations and also with the property buying process. Once an investor’s objectives have been identified a local estate agent can find the types of property or land that fulfill the objectives and can make offers to the vendor and deal with any counter offers to ensure that a property is secured for sale to the investor.
It is usual to negotiate a property’s selling price in Egypt - unless buying off plan. If buying off plan the price is fixed with some extras usually negotiable for inclusion in the asking price. Once a property has been decided upon it is usual to pay a holding deposit that takes the property off the open market while contracts are drawn up. In a country with real estate registration issues as complex as Egypt it really is critical to have a lawyer conduct searches and to advise on the legality of the purchase. Even if a property investor in Egypt is buying a brand new property from a well established developer it is wise to take advice from an independent lawyer.
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