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Everything you need to know is included in our Egypt Property Pack
Are you thinking of buying real estate in the Land of the Pharaohs? Are you unsure if it's the right time to take action?
Each person has their own stance on market timing. Your Egyptian colleague might suggest that now is a perfect time to invest in property, whereas your spouse, who is originally from Cairo, might have a different view and recommend waiting for more stability.
At SandsOfWealth, when we create articles or update our pack of documents related to the real estate market in Egypt, we base our analyses on factual data and statistics rather than opinions, minimizing biases and uncertainties.
We have gone through official reports and government website statistics in great detail. As a result, we have created a reliable database filled with valuable information. Here's what we found, which can help you decide whether it's the right time to buy real estate in Egypt.
Happy reading, and let's dive in!
How is the property market in Egypt now?
Egypt is currently a highly vulnerable country
Negative
Stability is a necessary condition when investing in real estate because it fosters consistent cash flows and long-term wealth building. It is an information you need as a foreigner looking to buy real estate in Egypt.
Unfortunately, Egypt does not possess the stability required to be classified as a stable country today. The last Fragile State Index reported for this country is 82.8, which one of the lowest scores in the world.
Egypt is currently highly vulnerable due to its severe economic challenges, including high inflation rates and a significant foreign currency shortage, which have strained its ability to import essential goods and service its debt. Additionally, the country faces political instability and social unrest exacerbated by these economic difficulties, alongside ongoing security concerns in the Sinai Peninsula.
First check tells us not to invest in this country. Let's look at more data.
Egypt is on track for significant expansion
Positive
Before buying real estate, check the economic viability of the country.
According to the IMF, Egypt is set to conclude 2024 with a growth rate of 3%, which affirms the country's positive direction. Regarding 2025, the figure we're looking at is 4.4%.
Besides that, the economy will keep growing since Egypt's economy is expected to increase by 19.4% during the next 5 years, resulting in an average GDP growth rate of 3.9%.
The expected sustainable growth rate in Egypt indicates a stable and expanding economy, which can lead to increased demand for real estate as more people and businesses seek properties. This growth can drive property values up, offering potential investors the opportunity for good returns on their investments.
Now, let's delve into other metrics worth exploring.
Egypt's population is growing and getting significantly richer
Positive
When buying real estate, it's important to consider population growth and GDP per capita, because:
- a growing population means more people needing homes
- a higher GDP per person means people have more money to spend on housing (which can lead to increased property value over time)
In Egypt, the average GDP per capita has changed by 12.5% over the last 5 years. It's far beyond the global average. Furthermore, the Egyptian population is growing (+12% in 5 years).
This means that, if you purchase a luxurious apartment in Cairo and rent it out, you will find that each year, you'll attract more tenants with sufficient funds to cover the rent.
If you're considering purchasing and renting it out, this trend is a good thing. Then, there might be a rise in rental demand in Egyptian cities like Cairo, Alexandria, or Luxor in 2025.
Rental yields are really interesting in Egypt
Positive
To assess the income potential of a property investment, examine the expected rental yields.
It represents the annual rental income generated by a property divided by its purchase price or market value. For instance, if a property in Egypt is purchased for 1,000,000 EGP and generates 60,000 EGP in annual rental income, the rental yield would be 6%.
According to Numbeo, rental properties in Egypt offer gross rental yields ranging from 5.5% and 8.2%. You can find a more detailed analysis (by property and areas) in our pack of documents related to the real estate market in Egypt.
It's hard to find higher yields elsewhere.
Everything you need to know is included in our Egypt Property Pack
In Egypt, inflation is anticipated to be minimal
Neutral
In two words, inflation is when money loses worth.
It's when your favorite falafel sandwich in Cairo costs 20 Egyptian pounds instead of 15 Egyptian pounds a couple of years ago.
If you're about to invest in a property, high inflation can benefit you:
- property values tend to increase over time, leading to potential capital appreciation
- inflation can result in higher rental rates, increasing cash flow from the property
- inflation reduces the real value of debt, making mortgage payments more affordable
- real estate can act as a hedge against inflation, preserving the value of the investment
- diversifying into real estate provides stability during inflationary periods
- tax advantages, like depreciation deductions, can help offset the impact of inflation
According to the IMF's estimations, over the next 5 years, Egypt will have an inflation rate of 1.0%, which gives us an average yearly increase of 0.2%.
This data means that Egypt is expected to have near-zero inflation then. Prices won't rise and then your property investment may not appreciate.
Egypt's currency is currently very low
Positive
If you're a foreign investor, this is something you should pay attention to.
The Egyptian Pound (EGP) is greatly devalued: the currency is currently 29-33% over the past five years.
As a foreign investor, purchasing property in Egypt while the currency is low could offer significant cost advantages, allowing you to acquire assets at a reduced price compared to stronger currency periods. However, it's crucial to consider the potential risks associated with currency volatility, economic instability, and the possibility of further devaluation, which could impact the value of your investment. Additionally, understanding local regulations, property market trends, and the long-term economic outlook for Egypt is essential to making an informed decision.
Is it a good time to buy real estate in Egypt then?
Time to conclude !
While Egypt's economy is projected to grow by 19.4% over the next five years, making it seem like a promising time to invest in property, there are underlying vulnerabilities that could make 2025 a less than ideal time to buy. The country's economic growth, with an average GDP increase of 3.9%, might suggest stability, but this growth can also lead to increased demand for real estate. As more people and businesses seek properties, the competition could drive property values up, potentially pricing out new buyers or reducing the affordability of investments.
Moreover, Egypt's growing and increasingly affluent population might seem like a positive factor for real estate investment. However, this demographic shift can also lead to heightened demand for housing, which could further inflate property prices. While this might be beneficial for current property owners, it could pose challenges for new buyers trying to enter the market, as they may face higher costs and increased competition.
Rental properties in Egypt currently offer attractive gross rental yields, ranging from 5.5% to 8.2%, according to Numbeo. However, these yields might not remain as appealing if property prices continue to rise. As the cost of purchasing property increases, the return on investment from rental income could diminish, making it less lucrative for investors who are looking for strong rental returns.
Additionally, while inflation in Egypt is anticipated to be minimal, the country's currency is currently very low. This could pose a risk for foreign investors, as currency fluctuations might impact the value of their investments. If the Egyptian pound strengthens in the future, it could affect the profitability of property investments made when the currency was weaker. Therefore, potential investors should carefully consider these economic factors and vulnerabilities before deciding to buy property in Egypt in 2025.
We wish this article has been of help!. If you need to know more, you can check our our pack of documents related to the real estate market in Egypt.
-Will real estate prices go up in Egypt?
This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.