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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 83.6, which one of the lowest scores in the world.
Egypt is highly vulnerable due to its reliance on external aid, and lack of resources to support its large population. Additionally, the government is facing several economic and political challenges, making it difficult to meet the needs of its citizens.
First check tells us not to invest in this country. Let's look at more data.
Egypt is heading towards substantial growth
Positive
Before buying real estate, check the economic viability of the country.
According to the IMF, Egypt is set to conclude 2023 with a growth rate of 3.7%, which affirms the country's positive direction. Regarding 2024, the figure we're looking at is 5%.
In the future, we can even expect the growth to accelerate since Egypt's economy is expected to increase by 22.7% during the next 5 years, resulting in an average GDP growth rate of 4.5%.
Egypt's projected strong growth indicates that the economy is becoming more stable and prosperous, which is great news for anyone looking to invest in property in the country as it suggests the value of their investment could increase over time. Furthermore, a thriving economy means that demand for housing is likely to increase, making it a smart investment.
Now, let's delve into other metrics worth exploring.
Egypt's population is 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.
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 2024.
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, there are projections of sky-high inflation
Positive
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 63.7%, which gives us an average yearly increase of 12.7%.
This data means that Egypt is expected to experience strong inflation. If that happens, buying property now could be the right move.
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 30-34% over the past five years.
As a foreign investor, buying a property in Egypt now may be a good idea as the low currency rate could make it much more affordable. However, it is important to consider the potential risks associated with the current economic situation in Egypt, such as the potential for further devaluation of the currency. Additionally, it is important to assess the local market conditions to ensure that the investment is suitable for your needs.
Is it a good time to buy real estate in Egypt then?
Time to conclude !
Despite some favorable signals, 2024 might not be the most opportune time to invest in property in Egypt due to several concerning factors. While the country is projected to experience substantial growth, potential investors should be cautious given Egypt's current vulnerability on the global stage. Political and economic uncertainties can impact long-term investment stability.
The increase in Egypt's population wealth is a positive signal, but it's essential to consider the broader economic landscape. The country's social and economic challenges, combined with the potential for political instability, could undermine the sustainability of this growth. Such uncertainties can influence property market dynamics and investment returns.
Although rental yields appear interesting, the potential impact of sky-high inflation must not be overlooked. Inflation can erode the purchasing power of consumers and impact their ability to pay rents at current levels. This could lead to adjustments in rental prices, affecting the anticipated rental income for property investors.
The significantly low value of Egypt's currency is another factor that may deter potential investors. A weak currency can lead to increased costs for imported materials and goods, which could indirectly affect property development and maintenance expenses. This can potentially impact the overall profitability of property investments.
Adding to the concerns is the perception of Egypt as a highly vulnerable country. Geopolitical tensions, regional conflicts, and domestic challenges can contribute to an unpredictable investment environment. These negative signals, combined with the positive ones, create a complex landscape that requires careful consideration before making property investment decisions in Egypt in 2024.
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.
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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.
Buying real estate in Egypt can be risky
An increasing number of foreign investors are showing interest in Egypt. However, 90% of them will make mistakes. Avoid the pitfalls with our comprehensive guide.
