A gateway to the Red Sea

Property in Egypt is catching the attention of the savvy international investor looking to invest in an exotic, historical and beautiful country with a warm climate and a booming tourist industry. With 7,000 years of civilization for visitors to explore and enjoy, it is a nation with vastly diverse and intensely appealing landscapes.

Egypt has some of the most beautiful beaches in the world, is a nation naturally blessed with amiable and hospitable people and has achieved the status of one of the top diving destinations in the world thanks to its crystal clear waters and mesmerising coral reefs.

The economy has undergone extensive reforms resulting in a rise in GDP of 7.2 per cent in 2007. Naturally such a strong economy enhances the potential for property price appreciation as local affordability improves. This also means Egypt is reinvesting wealth into the improvement of everything, from amenities, to infrastructure and accessibility.

All these factors have a positive and direct effect on the overall appeal of the nation as a place to holiday, live, retire or invest in. Egypt is one of the most affordable medium-haul destinations offering year-round sunshine, increasingly serviced by low-cost operators following the recent liberalisation of aviation. This improved accessibility has led to a greater number of tourist arrivals and a higher demand from overseas property investors.

Property in Egypt is one of the newest and still relatively undiscovered emerging markets for property investors who want to buy property with a high return from rental, great capital growth, at a low price. Foreign purchasers have the right to own real estate and land in Egypt.

Today the government recognises the great value foreign property investors have for the success of the economy and are actively encouraging overseas buyers to invest in Egypt. Property prices remain incredibly low even though the market has experienced a 50 per cent growth in one year over the last few years.

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 key locations are currently attracting as much as 25 per cent annual capital growth. Well-established tourist hot spots are already in existence, particularly along the Red and Mediterranean Sea coasts, catering for a wide variety of modern touristic requirements, from excellent diving and snorkelling, five-star hotels and golf courses to cultural and historical activities.

New off-plan opportunities by international developers are being built, attracting buyers who are looking for a secure investment with good potential at extremely low prices. The Red Sea coast is not only a diver's paradise but also a wonderful location where to relax and enjoy the sun.

The construction of new golf courses and marinas will ensure Hurghada provides a gateway to the Red Sea's prime diving sites and is unique in offering access to many uninhabited offshore reefs and islands. The warm waters boast endless varieties of rare fish and coral reefs.

Developments planned within Hurghada are built and managed in conjunction with UK companies. This will elevate Egypt to be among the most luxurious resorts in the world. With fully managed services, a wide range of accommodation types, short- walking distance from the beach, extensive facilities, and good payment terms, these properties will have something to offer to everyone. Prices of apartments start from €25,380 (Lm10,895). Rental yields, as high as 11.35 per cent, are already achievable from property located in tourist hotspots.

In fact, the Global Property Guide ranks Egypt as the best country for residential rental returns. Visitor numbers continue to rise year-on-year fuelling the strong demand for holiday rental accommodation, thus strengthening a large proportion of the market for investment property in Egypt.

Property purchase in Egypt is simple. There is no stamp duty or capital gains tax payable on real estate. Inheritance tax was abolished in 1996 and tax on rental income runs at 20-22 per cent. Many countries, including Malta, have signed a double taxation treaty with Egypt.

Mr Busuttil is managing director, Propertyline International