Land of the Pharaohs

Egypt is attracting an abundance of Middle East developers all with a vision of creating new property era for Egyptian civilisation.

Emulating the rest of the Middle East, the Arab nation Egypt has undergone its own property boom over the past three years concentrated around Cairo and its Red Sea and Mediterranean Coasts.

The Egyptian Tourism Authority announced that real estate prices had appreciated by 50% over the last two years leading many to talk of an Egyptian property bubble with warnings of a glut of stock and unrealistic prices.

But the reality is far from this gloomy portrait and with a number of major Middle-Eastern developers entering the Egyptian arena the country looks set to emulate Dubai's path with projects such as Cairo Festival City on the horizon and certainly no bubbles.

Egypt appeals to both Middle Easterners and Europeans - an exotic location that is not too far away. In fact, a recent report by the European Association of Travel Agents and Tour Operators Association highlighted Egypt as the number one medium-haul destination for Europeans. It boasts arguably some of the best diving spots in the world along the Red Sea Coast and Sinai Peninsula as well as its unrivalled historical prowess.

There are but a few locations in the world where you can have "such massive history on your doorstep," says David Vaughan of Savills International, so it's easy to see why Egypt has forged a reputation for itself as the cultural nation of the Middle East.

With its relatively homogenous 80 million strong population and a rising middle class, Egypt now delivers a low risk investment in a wider market driven by both domestic demand and international demand for holiday homes as the country seeks to increase its number of visitors to 16 million per year by 2014.

Egypt's investment climate has come a long way from the nationalisation days of Nasser, so much so that the IMF in its 2007 annual report rated it as one of the leading countries undertaking investment reforms.

It recently overtook South Africa as the leading foreign direct investment recipient in Africa. The government has undertaken extensive privatisation reforms in trying to develop an export market for their natural gas deposits which has inevitably been mirrored in other industries. Attractive measures in the real estate industry include no capital gains tax on property.

Talking about Egypt's turn in the spotlight, David Vaughan from Savills International who market a number of elite schemes on the Red Sea Riviera said: "Egypt is going to see fantastic growth but it hasn't been promoted well until now, and it's bad luck that it's starting to emerge at a time that coincides with the credit crunch".

True, that may affect Europeans looking to buy in Egypt however, cash-rich and securely funded Arabic investors are perfectly placed to take advantage of what Egypt has to offer.

Although Egypt has been criticised for its lack of mortgage lending which stands at less than 1% of GDP (in comparison to the USA at 65%, the UAE at 14% and Europe at 45%) with the current experience of the UK and US economies, one may be forgiven for re-evaluating that viewpoint and certainly for seasoned investors the low level of mortgage lending is not a concern.

This scenario also looks likely to change rapidly with an influx of foreign banks setting up in Egypt. The National Bank of Abu Dhabi has 11 branches already there and is striving to become the number one foreign bank in Egypt.

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