Articles
Egypt's emerging property market is being built on tourism
As published by Fly2Let
Date: August 2008
Egypt is one of the most promising emerging markets in the world according to Steve Worboys, MD of a property investment specialist.
The fundamentals are in place for the annual 25 percent capital growth being enjoyed in certain parts of Egypt as well as rental yields in double figures.
The country is seeking to diversify its economy through tourism and real estate – with increased tourism comes demand for short-term rentals which fuels a Fly to Let property investment culture.
Also with increased tourism comes a growing awareness of the fact that Egypt is one of the shortest haul destinations for Britons and mainland Europeans who want year round sun. Then there’s the added attraction of the country’s history and culture, beaches and the development of resorts into which millions of pounds worth of public and private investment is being ploughed.
Worboys said: “The loose definition of an ‘emerging market’ in property terms is a real estate market that has yet to be tried and tested, where there is an element of risk hopefully offset by positive fundamentals for the potential of growth in terms of demand for property and the underlying value of land and real estate.”
In Egypt the emerging property market is being built on the tourism industry, the risk comes in the form of the nation’s once unstable economic past, the positive fundamentals for growth are centred on tourism, accessibility and the increase in interest in Egypt as a Fly to Let location. A combination of facts and figures appear to be stacking up in Egypt’s favour, but can this attractive situation last.
Taking the element of risk as the starting point for the analysis of whether Egypt will remain a positive property investment location, there has been a strong upsurge in the nation’s exports of oil and gas, revenues from the Suez Canal are soaring, and growth in the tourism industry is booming.
This would appear to underpin a sustainably strengthening economy according to the International Monetary Fund. The organisation stated that ‘the Egyptian economy will continue to grow at 7-8 percent’ making it one of the fastest growing in the Middle Eastern Region. In terms of the property market in Egypt as it stands today, according to the nation’s Prime Minister investment activity is up 40 percent that has helped increase foreign direct investment into the nation to over USD 10 billion.
Looking at the positive fundamentals required to ensure Egypt remains on track as a highly successful property investment location, one only has to look as far as the tourism industry. But is all this just theory? Not according to a report from the United Nations World Tourism Organisation (WTO) that indicates that Egyptian tourism figures for 2007 rose by 20 percent. According to the World Travel & Tourism Council (WTTC) tourism is now on target for up to a 7 percent annual increase over the next decade, the Tourism Minister has a plan in place to attract 14 million visitors by 2011, and a new initiative targeting Asia, Europe and North America is expected to ensure a doubling of tourists by 2015.