In a bid to attract more foreign investment into Egypt’s already surging property market, the government in Cairo is to offer residency permits to foreigners who acquire property worth a minimum of $100,000.
In 2016, Africa’s third most populous country launched an economic overhaul as a part of an IMF-approved $12bn loan programme. Austerity measures included currency flotation, tax rises and a series of subsidy cuts. Together with a concentrated counter-terrorism strategy and wider efforts to improve security, Egypt’s economy is now reaping the rewards across several key sectors.
In May 2018, Harvard’s Centre for International Development released its Global Growth Projections report which ranked Egypt as the world’s third fastest growing economy following India and Uganda. The report expects a 6.63% annual growth in Egypt’s economy by 2026.
In addition, the United Nations Trade and Development Board (UNCTAD) ranked Egypt as the top destination in Africa for foreign direct investment. Foreign reserves reached an all-time high of $44.4bn in 2018.
With its perfect all year-round temperatures and proximity to most European hubs, Egypt is also a major tourist hub with a lot on offer for visitors. The land of the Pharaohs is well known for its historic monuments such as the Great Pyramids and the Sphinx, the Abu Simbel temples in Aswan and the Valley of the Kings and Karnak Temple in Luxor.
The Red Sea Riviera is an international destination regarded as one of the finest diving spots in the world. The United Nations World Tourism Organisation revealed in its annual report that Egypt received approximately 8.5 million tourists in 2017 (55.1% year-on-year increase) making it the world’s fastest growing tourist destination.
An official population census in 2017 recorded 104.5 million Egyptians of which 9.5 million lived abroad.
If current fertility rates remain unchanged, it is expected that Egypt’s population will reach 128 million by 2030. The Ministry of Housing estimates that a minimum of 200,000 new homes need to be built every year to face the housing shortage in face of the rapidly growing population.
Capitalising on this growing housing demands, many private property developers have launched new developments across the country. To address affordability, and because the market is largely cash based with a small proportion of mortgage transactions, off plan property developers are offering extended payment plans for up to 10 years with no added interest.
The central government is keen to promote the real estate market to increase FDI in the country. Under the new law, a one-year residency permit will be granted to foreigners who buy a property for as little as $100,000.
Three- and five-year residency permits will be granted for property purchases worth $200,000 and $400,000 respectively. These measures imitate similar residency programmes previously adopted in countries such as Spain and Portugal which helped boost their property markets. Egypt’s private property developers welcomed the decision as a positive step to attract more foreign investment into Egypt’s promising property market.
The country offers a range of luxury property at significantly lower prices compared to similar property elsewhere. A series of mega-projects such as the flagship New Administrative Capital, the coastal New Alamein City and the Suez Canal Economic Zone adjacent to the newly-expanded Suez Canal, will encourage additional investments.
Mohamed Elshiekh is the co-founder of Egypt Real Estate Hub, a UK-based agency for property developments in Egypt.