Is Now the Perfect Time to Invest in Real Estate in Egypt?

CEO Khai Intela
All sources have been thoroughly verified for credibility. Furthermore, an industry specialist has reviewed and approved the final article. Picture: Property market Egypt Everything you need to know is included in our Egypt Property Pack....

All sources have been thoroughly verified for credibility. Furthermore, an industry specialist has reviewed and approved the final article.

property market Egypt Picture: Property market Egypt

Everything you need to know is included in our Egypt Property Pack.

Are you considering buying real estate in the Land of the Pharaohs? Unsure if it's the right time to take action?

Everyone has their own opinion on market timing. Your Egyptian colleague might suggest that now is the perfect time to invest in property, while your spouse, who is originally from Cairo, might advise 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, minimizing biases and uncertainties.

We have thoroughly researched official reports and government website statistics to create a reliable database filled with valuable information. In this article, we will explore whether it's the right time to buy real estate in Egypt.

So, let's dive in and find out!

How is the Property Market in Egypt Now?

Egypt is Currently a Highly Vulnerable Country

Negative Picture: Egypt GDP growth

Stability is a crucial factor when investing in real estate as it fosters consistent cash flows and long-term wealth building. Unfortunately, Egypt does not possess the stability required to be classified as a stable country today. It has one of the lowest scores on the Fragile State Index, with a score of 83.6.

Egypt is highly vulnerable due to its reliance on external aid and lack of resources to support its large population. The government is also facing economic and political challenges, making it difficult to meet the needs of its citizens.

So, the first check tells us not to invest in this country. Let's look at more data.

Egypt is Heading Towards Substantial Growth

Positive Picture: Egypt rental yields

Before buying real estate, it's important to check the economic viability of the country. According to the IMF, Egypt is set to conclude 2023 with a growth rate of 3.7%, affirming the country's positive direction. In 2024, the projected growth rate is 5%.

In the future, we can even expect the growth to accelerate, with Egypt's economy 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. This 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. In Egypt, the average GDP per capita has changed by 12.5% over the last 5 years, 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. 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 Picture: Egypt rental yields

To assess the income potential of a property investment, examine the expected rental yields. According to Numbeo, rental properties in Egypt offer gross rental yields ranging from 5.5% and 8.2%. It's hard to find higher yields elsewhere.

Now, let's move on to another important consideration.

Projections of Sky-High Inflation in Egypt

Positive

Inflation is when money loses its worth. If you're about to invest in a property, high inflation can actually benefit you. It can result in higher rental rates, increased property values, and offer tax advantages.

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%. 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, with the currency being 30-34% over the past five years.

As a foreign investor, buying 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 currency devaluation. Additionally, it is important to assess the local market conditions to ensure that the investment is suitable for your needs.

Is Now the Perfect Time to Buy Real Estate in Egypt?

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 hope this article has been helpful! If you need to know more, you can check out our pack of documents related to the real estate market in Egypt.

Remember, 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.

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