Why Egypt is the best destination for Real Estate Investment?

In light of the rapid and unpredictable global economic changes, Real Estate Investment in the Egyptian market is an ideal choice for those seeking safe investments and high financial returns.

This is due to Egypt’s investment-friendly environment, ongoing infrastructure development, and government incentives. Additionally, the relative stability of the economy after the Central Bank’s decision to float the currency in the first quarter of 2024 has made the Egyptian real estate market a preferred destination for both local and foreign investors. The market has successfully achieved this balance for several key reasons:

The notable growth in the Egyptian economy

The economic situation in Egypt shows relative stability in the real estate market, according to the JLL global real estate services and investment report for the second quarter of 2024. The report noted that the Central Bank’s decision to float the pound in the first quarter has shifted perceptions in the real estate sector, particularly regarding office spaces in Cairo. This change is expected to create opportunities for improvement and long-term growth in the real estate market in Egypt due to the following:  

1- Ongoing developments: 

In 2024, the Egyptian economy witnessed significant developments, especially in the real estate sector, where the number of new real estate projects increased by 50% during the first quarter compared to the same period in 2023. Additionally, 12 projects were launched with a total cost of $1.59 billion. This growth played a vital role in stabilizing the economy after the central bank decided to float the exchange rate, which boosted confidence in the Egyptian market. 

2. Growing Opportunities in New Cities:

– According to the JLL report on the Egyptian real estate market, New Cairo noticed the highest increase in property sale prices, with an annual increase of about 180% in the second quarter. Sales prices also surged by 83% year-on-year in 6th of October City and by 95% in New Cairo.

– This was followed by a significant rise in rental prices, with increases of 42% and 43% in the 6th of October and New Cairo, respectively. 

3- The increase in residential properties: 

– The Egyptian real estate market is characterized by a strong presence of residential projects, which hold a significant share of the market. The number of ongoing projects is 654, with a total value of 307.182 million dollars, representing around 53.9% of all projects and 67.4% of the total investment value.

– About 2,200 new residential units were completed in the second quarter, adding to the current supply of about 278,000 units, most of which are apartments. More than 22,000 additional units are expected to enter the market in the second half of this year.
– Expectations point to long-term optimism in Cairo’s residential sector, driven by various factors, including the Ras El Hekma deal and the partnership between Egypt and the European Union. These developments further position Egypt as an attractive destination for foreign direct investment and offer growth and investment opportunities in the real estate market.

Ayman Sami, Head of JLL Egypt, said: “The real estate sector is a cornerstone of the Egyptian economy, and its current trajectory reflects renewed confidence in the market. Favorable government policies, a more stable currency, and large capital inflows are driving growth, and long-term outlooks remain positive, supported by sustained demand and a favorable investment climate.” 

However, it is not only the growing economic environment and multiple opportunities that fuel the growth of real estate investment in Egypt; the expected high investment returns also represent the most important attraction for the Egyptian real estate market. 

High investment returns

What makes the Egyptian market the ideal choice for real estate investment is the competitive investment return that the real estate market offers across various types of properties, including residential, administrative, commercial, and coastal real estate.  where annual investment returns range from 8% to 15%. Below, we detail the expected investment returns for each type: 

1- Residential properties: 

– The expected return on investment from residential real estate in Egypt usually ranges between 5% to 10% annually, and in some outstanding projects, it can reach up to 15%, especially in modern areas like the New Administrative Capital and New Cairo.

– The residential market in Egypt is also experiencing significant growth, according to Mordor Intelligence. Its current sales value is estimated at around 18 billion USD, and it’s expected to rise to $30 billion by 2028. The market size in 2024 reached $20.02 billion, and it is projected to grow at a compound annual growth rate (CAGR) of 10.96% until 2029, driven by increasing demand for residential units in new urban areas like New Cairo and Sheikh Zayed.

2- Commercial properties:  

– This type of investment is characterized by relatively stable returns, especially with the development of shopping centers and commercial buildings in the New Administrative Capital. According to Mordor Intelligence, the commercial real estate market in Egypt is expected to reach $15.29 billion by 2029, particularly in key areas like Cairo and Alexandria, where demand for commercial spaces is higher. 

– Moreover, the price per square meter for commercial properties in Egypt has significantly increased during the first half of 2024. In areas such as New Cairo and 5th Settlement, prices currently range between 200,000 and 500,000 Egyptian pounds per square meter, depending on the type and location of the project.
An increase of 20% to 40% has been observed compared to the previous year, reflecting the growing demand for these properties.

-Therefore, the expected investment return from commercial properties in Egypt ranges between 8% to 14%, based on the property’s location and surrounding market conditions. It is known that the return from commercial properties is usually higher than that of residential properties, due to the higher rental value and the frequent renewal of contracts for long periods ranging from 3 to 10 years, compared to residential properties which have relatively shorter contracts. 

3- Administrative Real Estate

– In the first half of 2024, the prices of administrative properties recorded a significant increase in areas such as the Fifth Settlement, where their prices reached between EGP 200,000 and EGP 300,000, with an increase in demand for high-quality Class A units.

– Administrative real estate in Egypt is expected to see an increase in rental rates, particularly in the New Administrative Capital and surrounding areas, making it an attractive option for administrative investment. Reports indicate a high demand for these properties.

– Thus, the expected investment returns from investing in administrative real estate in Egypt typically range between 8% to 12% annually, as the demand for these properties increases due to the continuous need for larger office spaces, enhancing their appeal as a safe and profitable investment.  

4. Coastal Real Estate

– Investing in coastal real estate in Egypt is seen as an attractive option for achieving high returns, as Current statistics and trends suggest that expected investment returns could reach up to 15% annually in coastal areas, making them higher than in many other markets, including some European countries. 

– According to a report from Knight Frank, these destinations are highly popular among local buyers and foreign investors, especially since they offer rental returns ranging between 5% and 7% annually on luxury coastal properties. Additionally, property prices have seen annual increases of up to 15% in some of the most in-demand areas.

– For example, New Alamein City is experiencing rapid growth thanks to large-scale projects, including luxury residential towers and premium tourist facilities like the waterfront promenade and water treatment plants. As a result, the city is attracting significant investments from both the public and private sectors, making it a key hub for coastal real estate investment in Egypt.

These multiple factors attract both foreign and local investments, which is why the Egyptian government is working to enhance these factors by improving the investment environment and providing a series of facilities that aim to attract more investors and provide the most suitable climate for the development of real estate investment. 

Egyptian government’s facilities 

Below, we highlight the Egyptian government’s efforts to improve the quality of real estate investment and the key incentives to boost foreign investments: 

1- Supporting foreign ownership 

The laws were amended to allow foreign investors to fully own properties, which boosted the flow of foreign direct investments in the real estate sector. According to the New Urban Communities Authority, demand for properties by foreigners increased by 15% in new tourist and urban areas, such as the New Administrative Capital and the North Coast, during the first half of 2024. 

2- Expanding New Cities and Providing Infrastructure

The Egyptian government has invested in developing new cities such as the New Administrative Capital and El Alamein City, giving a budget of EGP 100 billion for infrastructure development. Additionally, the government has launched a unified electronic platform to streamline investment procedures and land allocation in these cities, which has contributed to a 20% increase in land demand in these areas in 2024 compared to 2023.

3- Improving the Investment Environment 

Several laws have been amended to improve the real estate investment environment, such as reducing fees related to property registration and removing legal obstacles that previously hindered investment in certain areas. According to the Ministry of Housing, these measures have helped increase the number of registered real estate projects by 25% in 2024. 

4- Launching the Updated Version of Egypt’s Investment Map

The investment map of Egypt has been updated to include 2,551 investment opportunities and 57 reference feasibility studies. An integrated electronic system has been developed to submit and track applications entirely online. This update allows investors to easily identify investment opportunities and apply for them without the need for paperwork or human intervention. 

5- Broadening the scope of the “golden license”

The Supreme Investment Council has expanded the scope of the “Golden License” to include more projects and companies, including those established before the Investment Law of 2017. This license provides exemptions from bureaucratic procedures and shortens the time required to obtain approvals, thereby facilitating the investment process. As a result, this expansion of the Golden License helps attract more investments in the real estate sector and enhances the confidence of both local and foreign investors in Egypt’s investment environment.

Based on all the previous factors, investing in the Egyptian real estate market represents an exceptional opportunity due to its diverse investment options and profitable returns, thanks to its strategic location. Egypt has established itself as one of the best countries for real estate investment in the region, offering investors multiple possibilities in residential, commercial, and administrative properties.

However, in a world full of challenges and opportunities, ensuring maximum benefit requires choosing the ideal success partner. This is where AFFSQUARE comes in, as we provide you with a roadmap for success in the Egyptian real estate market through a concise guide to the best real estate investments, enabling you to begin your investment journey in the Egyptian market with safety and confidence.

To know more about the best places to invest in:

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Top Investment Projects in the North Coast for 2024, Part 1

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