Latest / IMI Podcasts / Demand is "Massive and Organic": Hany Mostafa Moawad on Property Investment in Egypt

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Demand is "Massive and Organic": Hany Mostafa Moawad on Property Investment in Egypt · IMI Podcasts

• 0:00
  SPEAKER_00: With a strategic location and one of MENA's biggest economies, Egypt is a desirable destination for many seeking business and pleasure, particularly for investors from the GCC region.
• 0:11
  SPEAKER_00: In 2020, it launched its citizenship by investment program to give foreigners an easy and quick route to citizenship while attempting to shore up its foreign currency reserves.
• 0:21
  SPEAKER_00: Investors can get Egyptian citizenship by donating$250,000 to the state treasury, investing$800,000 in real estate, or$850,000 in a business, or making a three-year deposit of$500,000 in a local bank.
• 0:37
  SPEAKER_00: Egypt also has a golden visa program, with a minimum investment of$50,000.
• 0:43
  SPEAKER_00: As the Citizenship by Investment Unit's deputy head recently revealed to IMI in an interview, the CBI program has attracted over 1,000 applicants so far, about three-quarters of whom have been Syrian.
• 0:55
  SPEAKER_00: Unlike many countries that restrict foreigners' access to local real estate markets for fear of price hikes, Egypt has expanded its real estate offering for investors.
• 1:05
  SPEAKER_00: Initially it was limited to government-owned projects.
• 1:08
  SPEAKER_00: But, as of last year, any real estate purchase nationwide would qualify for CBI, explains Hani Moawad, managing director at Prime Properties.
• 1:18
  SPEAKER_00: All real estate is now open, primary, secondary, resale, there are no restrictions.
• 1:24
  SPEAKER_00: Everyone can buy anywhere except for the Sinai Peninsula, said Mowad, speaking to IMI on the sidelines of Global Citizen Week Cairo 2024.
• 1:33
  SPEAKER_00: He isn't concerned about the program's potential inflationary impact on the real estate market, as many have alleged to be the case in other countries.
• 1:41
  SPEAKER_00: In Egypt's case, he explains, the demand for real estate is massive and genuine.
• 1:47
  SPEAKER_00: The number of people foreigners buying real estate for citizenship is negligible compared to the overall demand.
• 1:52
  SPEAKER_00: So I don't see any potential negative impact.
• 1:55
  SPEAKER_00: Foreigners, he says, purchased more than half a billion dollars worth of properties in Egypt last year.
• 2:01
  SPEAKER_00: The demand, he says, is strong, and there are waiting lists for new properties.
• 2:06
  SPEAKER_00: As a consequence, he says, there is little need for foreign buyers to worry about inflated markups.
• 2:12
  SPEAKER_00: The demand is organic.
• 2:14
  SPEAKER_00: He also explains that Egypt has a variety of real estate offerings.
• 2:18
  SPEAKER_00: Investors seeking immediate rental revenue should opt for properties in the Red Sea area, and others seeking the biggest ROI should consider the new administrative capital currently under construction east of Cairo.
• 2:39
  SPEAKER_01: We want to ask you a bit about the Egyptian Citizenship by Investment Program.
• 2:44
  SPEAKER_01: The government recently made a lot of changes to the program, considerable ones.
• 2:48
  SPEAKER_01: Changing investment options, opening it to the open market in terms of real estate, and changes in terms of approved agents and whatnot.
• 2:56
  SPEAKER_01: What do you think the catalyst for these changes was?
• 2:59
  SPEAKER_02: We wanted to be more competitive.
• 3:01
  SPEAKER_02: So the main catalyst for those changes that happened in the program was to be more competitive among other citizenship by investment programs.
• 3:10
  SPEAKER_02: Egypt is a promising market, and uh we want to have the best program uh and the most suitable one for the applicants who are going to apply for the citizenship of Egypt.
• 3:21
  SPEAKER_01: And I want to go into uh the real estate option a bit more.
• 3:24
  SPEAKER_01: So now it's operating on an open market.
• 3:26
  SPEAKER_01: Yes.
• 3:27
  SPEAKER_01: Any real estate is available.
• 3:28
  SPEAKER_02: Yes.
• 3:29
  SPEAKER_01: But that comes risks sometimes, markups, over evaluation.
• 3:33
  SPEAKER_01: What is the government doing to protect investors from these issues?
• 3:37
  SPEAKER_02: Okay, so for the real estate uh new adjustments, which basically opened the market to uh resale, primary market, secondary market, basically all the options and not restricting it to the government-owned uh projects and properties.
• 3:53
  SPEAKER_02: Now everyone can buy anywhere except for the Sinai Peninsula.
• 3:57
  SPEAKER_02: And because Egypt is uh a genuine market, we have 1 million marriages every year, we have 2.2 million babies every year.
• 4:08
  SPEAKER_02: So the demand on the real estate is is massive, and our production is not usually matching this number of demand.
• 4:18
  SPEAKER_02: So what happens is it's a very organic market.
• 4:22
  SPEAKER_02: They don't need to do any markups.
• 4:24
  SPEAKER_02: The developers already have a waiting list for people who are buying off plan.
• 4:29
  SPEAKER_02: The demand is very genuine and uh there is no need to do any markups.
• 4:34
  SPEAKER_02: Um even the government intervention now wouldn't make any sense because everything is being sold very fast.
• 4:41
  SPEAKER_02: I think this is something that the applicants shouldn't be worried about, especially the ones who are already familiar with the market.
• 4:48
  SPEAKER_02: According to the latest statistics from the Central Bank of Egypt, foreigners purchased almost$530 million worth of properties just in the last financial year.
• 5:01
  SPEAKER_02: So you can imagine the amount of demand on the market.
• 5:03
  SPEAKER_02: There is no need for any markups or any games to be played.
• 5:07
  SPEAKER_01: I want to touch on something you said.
• 5:08
  SPEAKER_01: So you said that supply is barely keeping up with demand.
• 5:12
  SPEAKER_01: Yes.
• 5:12
  SPEAKER_01: Are there any fears among the population that something may happen, like in Turkey, where the citizenship by investment and PR programs were blamed for massive real estate inflation?
• 5:23
  SPEAKER_01: How is the general view of the program from the perspective of the Egyptian population?
• 5:28
  SPEAKER_02: No, they um the perspective uh of the program regarding the the real estate part, um, to be honest, it's not that much of an effect.
• 5:38
  SPEAKER_02: The the number of people who are buying uh and doing the investment of real estate for the sake of citizenship is a negligible number compared to the genuine demand that is already, without any reason, they are already buying.
• 5:53
  SPEAKER_02: It's their safe place where they can put their money.
• 5:56
  SPEAKER_02: So it's not I wouldn't say that it's going to affect by any way neither uh sides.
• 6:02
  SPEAKER_01: Finally, as a veteran in the Egyptian market and people coming in looking for real estate in a foreign country, which type of real estate would you suggest or would you advise your clients to pursue?
• 6:13
  SPEAKER_02: Okay, this is of course uh if we are advising the clients about which type of real estate, it will vary depending on the applicant request and what are they looking for?
• 6:26
  SPEAKER_02: Are they looking for something to invest in and resell it in the future?
• 6:30
  SPEAKER_02: They are looking for something that will get them immediate returns.
• 6:33
  SPEAKER_02: Are some of them come for factories, some of them they do holiday homes?
• 6:37
  SPEAKER_02: So we are not recommending specific properties for the investors.
• 6:43
  SPEAKER_02: In fact, we are recommending, and we are very honest with our clients as well, and we recommend depending on what's suitable for the family or the applicant, what they are looking for, what is suitable to their cases, because you know Egypt has all the options open.
• 7:00
  SPEAKER_02: So we can recommend something that is suitable for the applicant, not to be focused on specific things.
• 7:07
  SPEAKER_02: So depending on the applicant.
• 7:09
  SPEAKER_01: Going back, I want to use Turkey as an example because of its proximity again and the similarities.
• 7:14
  SPEAKER_01: Do you think we'll see something similar to how people applying for the citizenship by investment program in Turkey all went and bought real estate in Istanbul, some in the south, but mainly focusing on Istanbul?
• 7:24
  SPEAKER_01: Do you think it's the same thing here in Cairo?
• 7:26
  SPEAKER_02: Okay, I I will tell you, uh I will try to uh to to brief it uh for you.
• 7:32
  SPEAKER_02: So if the applicants never came to Egypt before and they are looking into Egypt as if it's an investment for uh immediate rentants, then we send them usually or recommend for them usually the Red Sea area.
• 7:46
  SPEAKER_02: If they are looking for something that is going to be um having double the price or tripling the price very quickly, then the new administrative capital, of course.
• 7:55
  SPEAKER_02: Some people are looking for holiday homes that they can spend the whole uh summer in it.
• 8:00
  SPEAKER_02: So, of course, the north coast of Egypt, so New Alamin, Rasal Hekmah.
• 8:04
  SPEAKER_02: I think it's in the news that uh Emirates is investing heavily in the in the Rasal Hekma area.
• 8:09
  SPEAKER_02: And actually, this is one of the examples of the investment.
• 8:13
  SPEAKER_02: However, the GCC countries in general they invest a lot in multiple areas and in multiple locations, not just in Rasal Hekma or in the North Coast, but in fact in Cairo, we have a lot of malls, we have a lot of retail areas, commercial spaces.
• 8:28
  SPEAKER_02: If someone is looking for high immediate return, then we usually recommend some whether it's touristic.
• 8:35
  SPEAKER_02: If someone is looking for something that will get them a good resale price in the future, then definitely we go for the new administrative capital.
• 8:43
  SPEAKER_02: Unless someone wants to immediately reside in Egypt, then we recommend that uh like an old neighborhood, let's put it this way.
• 8:50
  SPEAKER_00: This episode first appeared as an article by Mustafa Daily on IMIDaly.com.
• 8:56
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• 9:02
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