Egyptian real estate outlook and overview
Egypt Real Estate

Egypt economic outlook - Overview of the Economy and Buying Property in Egypt
Investment potential in Africa and the Middle East

Investment opportunities and incentives available for investors in Egypt is becoming more prominent to the international markets.

Key factors to Buying Property for Sale in Egypt include:
Egypt’s fast growing tourism sector
Government to increase legislation benefiting investment climate
Property prices in Egypt remain low and affordable whilst demand for quality property for sale and short term let is increasing.
Major interest centred upon the resort areas of Egypt and the major cities like Cairo and Alexandria.
Second home resale market in the resort areas interest
Nearness to European and other Middle Eastern countries - ideal location for exotic vacations and retreats
Politically stable country
Good relations with most of the leading world powers
Investors are encouraged by taxation breaks,
Low labour costs
Growing middle class

Overseas real estate investors are aware that the growth in the purchasing power of the domestic market is fantastic for the long term profitability of all investments in Egypt’s property sector. The overseas tourism and second home markets will account for good yields and returns but a growth in domestic demand and purchasing power will allow investors to more aggressively target Egypt safe in the knowledge that they have a wider market to potentially profit from.

The wider Middle Eastern and African Markets
Egypt, Saudi Arabia, South Africa and the UAE are the most attractive consumer markets in Africa and the Middle East and also attractive investment destinations. Investment levels are highest in the UAE, boosting economic growth prospects there.

All investment destinations exhibit strength and weaknesses, which potential investors need to be aware of.

Investment levels are one of the main determinants of economic growth potential. The United Arab Emirates (UAE) has the highest levels of investment among the most attractive economies of Africa and the Middle East, signalling investment opportunities and great potential for future economic growth. The other major consumer markets of Africa and the Middle East are Egypt, Saudi Arabia and South Africa, taking into account the size of the economy, economic growth and population size. They too offer investment interesting opportunities.

Investment levels are high in Egypt, Saudi Arabia, South Africa and the UAE but differences exist:
• Gross fixed capital formation - investment in fixed assets - accounted for a higher share of GDP in the UAE than in the other economies in 2002 to 2006. Gross fixed capital formation reached 21.8% of GDP in the UAE;
• The UAE also attracted the highest level of foreign direct investment (FDI) inflows as a share of GDP between 2002 and 2006. FDI inflows reached 7.1% of GDP 2002 - 2006;
• Investment often goes to machinery and transport equipment and imports of these products accounted for the highest percentage of GDP in the UAE compared to the other three economies. These imports are lower in South Africa, which possesses the ability to manufacture these products itself;
• The low investment level in Saudi Arabia is slightly misleading because high oil incomes - due to high oil prices - have inflated GDP between 2003 and 2006. In Egypt, investment levels have increased since Ahmed Nazif became Prime Minister in 2004, instituting a series of far-reaching economic reforms.

Investment levels are a major determinant of future economic growth
• Investment in new technology - such as new machinery or communications equipment - allows for more efficient production, management and marketing;
• Investment is set to increase the exports of higher value-added manufacturing goods, which will drive economic growth.

South Africa is currently the largest exporter of manufactured goods, including high value-added machinery and transport equipment. The UAE and Saudi Arabia are also a successful manufacturing exporters while Egypt underperforms.

South Africa, the UAE and Saudi Arabia are therefore attractive destinations for investment in manufacturing.

Whether a country makes the most of high investment levels depends on a number of factors:
• A skilled and educated labour force is necessary to absorb the acquired technology. In 2005 - the last year that data are available for - literacy rates were highest in South Africa (87.1%), lower in Saudi Arabia (80.5%) and UAE (78.9%) and lowest in Egypt (59.3%);
• The share of students in higher education of the 20-29 year-olds was highest in Egypt (21.0%) in 2006, followed by the UAE (10.1%), Saudi Arabia (16.3%) and South Africa (8.6%). However, the quality of Egyptian higher education does not reach the level of the other countries. Saudi Arabia and the UAE attract a large pool of skilled foreign labour, while South Africa and Egypt are experiencing a "brain drain", the emigration of skilled workers to developed economies;
• The business environment shapes the attractiveness of an investment destination. According to a World Bank ranking of 175 countries by the ease of doing business in 2006, South Africa ranks highest (29) followed by Saudi Arabia (38), UAE (77) and Egypt (165).

FUTURE SCENARIOS
• The UAE is the most attractive investment target among the four economies. High investment levels create good prospects for medium to long-term economic growth. However, the business environment remains a concern and potential investors should look out for government initiatives in this area;
• Saudi Arabia invested a smaller proportion of GDP in new technology and machinery than the UAE. Medium to longterm economic growth in Saudi Arabia is set to lag behind the UAE, making the Saudi consumer market less attractive compared to its Gulf neighbour;
• South Africa has an excellent business environment and a strong manufacturing sector, attracting significant levels of investment. However, skills can be in short supply due to a "brain-drain" to developed economies and the discrimination against the black population during apartheid until 1994, which restricted access to education;
• Property for Sale in Egypt has become an attractive investment target due to a range of economic reforms since 2004. However, the business environment remains hostile and investors should look out for government efforts to cut red tape.