Investing in Property in Egypt is not without Risk You Know

Regular readers will know that we at Amberlamb have welcomed the positive economic and political developments seemingly taking place in Egypt and recently heralded the emergence of the nation’s fledgling property market as an interesting choice for investment for at least the medium term.  But please remember that investing in property in Egypt is not without risk you know…

While at the same time as investment property in Egypt is being heavily promoted by interested salespersons gearing up for the forthcoming UK based Homebuyer Show, wildcat strikes are in the news in Egypt as a huge gulf reveals itself as dividing the new affluent Egypt where GCC investment is pouring in and foreign property buyers are snapping up real estate for example, and the Egypt where poverty is rife and resentment is rising.  Believing that an investment made is a profit guaranteed is naïve and there are certain factors you should at least be aware of before you commit.

In December last year the Egyptian president presented over thirty changes to the constitution to change the face of Egypt and the international perception of the nation that pervaded following its adoption of socialist principles back in the 1960s.  The current president is committed to economic liberalism and creating a positive atmosphere conducive to foreign direct investment attraction and retention - and so far his efforts have reaped substantial dividends with billions of dollars of commitment inward flowing from GCC nations alone in 2006. 

Additionally, the promotion of a ‘new’ Egypt free from international strife has led to a dramatic and positive turn around in the nation’s tourism fortunes and looking to the future, on the face of it all factors are apparently in place for Egypt to become hugely affluent, influential and successful.  Any property investor ignoring these signs would be crazy right?

Well, yes and no!  To ignore the positive signs would be odd…but rather than taking everything at face value it is important to question assumptions and to delve a little deeper and look beyond government promises and the promotional activities of those with vested interests in the survival and success of both the Egyptian tourism market and the Egyptian property market!  (Sorry, no, we don’t believe everything we’re told at property exhibitions by real estate agents and property developers – we’re funny like that!)

So, what are we harping on about? 

Well, let’s get right to the point – the ‘new’ shiny, bright Egypt that is a land of unlimited and unrestricted opportunity for property investors wanting to buy into the luxurious Arab funded, government backed, purpose built communities for resale or rental to the tourism and second home market is real alright, but it is only one side of Egypt and it is possibly built on shaky ground. 

There is another side to Egypt that needs to be understood by investors and ideally tackled head on by the government if the country is to maintain its current reputation as a foreign direct investment hotspot. 

Basically, while many companies in Egypt continue to treat the local work force shoddily, fail to pay them their wages, renege on ‘guaranteed’ bonus payments and even cut swathes of jobs on a whim, and huge percentages of the population survive on less than two dollars a day there will continue to be worker unrest and local discontent.  International companies interested in entering a low cost market who are looking at a long term commitment in Egypt may well be put off by the state of the current employment marketplace and this will not do the economy any good at all.

Additionally, while essential government funding seems to have been re-routed to high profile property development or tourism promotional projects and away from low profile projects such as rail network upgrades which recently resulted in scores of commuters dying in a train crash how long will it be before international moral and ethical interest is raised and negative focus is placed on Egypt resulting in a downward trend in investment and tourism interest and potentially irreparable damage being done to the reputation that Egypt is so carefully attempting to cultivate for itself?

As with any emerging property market there are risks – Egypt is no exception – and even though those risks and issues highlighted above are some of the most severe in Egypt right now they do not totally detract from the very real fact that the nation has an incredible wealth of broad appeal, it is currently a tourism draw, it is seeing significant financial commitment from international vendors and the nation does have a government trying to do the right thing.  Our position remains that Egypt is a good medium term bet – but never overlook the risks!

Special Reports: Property News for Egypt

Egypt Property Buying Process
Property investment in Egypt is made difficult by an incomplete property registry but much is being done to improve things

Egypt Property Investor’s Country Guide
Property investor interest in Egypt is increasing as the Egyptian government encourages foreign investment and promotes economic growth.

Egypt Real Estate Investment Potential
Domestic and international demand for property for sale and rent in Egypt presents a property investor with maximum profit potential.