I don't think it is new; Sinai is mostly leasehold with 99 year usufruct rights as I understand it. No such problems in Hurghada however - all freehold there and a much better safety record....

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Hi everyone. I recently joined this forum in order to ensure I'm aware of all the known pitfalls when buying in Egypt. I recently put a £2k deposit down on one of the Hurghada Village Apartments. These are currently selling for around £30k for a one bed with large roof terrace and on the face of it looks like a good investment with guaranteed 7% annual rental return on the first 2 years.

I subsequently stumbled across your forum thread which brought to my attention the whole property registration issue and the 5 year no resale rule when the property is formally registered with the Egyptian authorities.

I subsequently went back to the agent who appeared to know nothing about the registration issue, but took around 2 or 3 weeks to get the following reply from their lawyers (see below).

The main problem I have with all this is that some agents are either unaware of the legal registration issue and the associated 5 year rule, or are simply not telling their clients about it. Indeed re the 3 or 4 agents we spoke to prior to putting down a deposit, all of them were selling the benefits of being able to 'spin' these offplan investments - i.e. making a quick profit by onselling them either before or shortly after completion.

At the present time we don't know how long we will hold on the apartment, but it would be good to know we had the option of selling within 5 years if we needed to - e.g. ill health, other investment opps etc.. On the other hand we, like everyone else, wants to know their investment is reasonably safe and legally made.

So the questions I'm now left with are:

1. The agent is now appearing to offer the purchaser (me) the option of either formally registering the property or not - with an apparent default on the no registration route.

2. If I go along with this second option of NOT formally registering the property in order to reserve the right to be able to resell at will - what additional risks am I exposed to? (if any). This advice appears to conflict with Peter's article "Positive Property Investment Forecast for 2007" on purchasing a property where he advises: "Even though many Egyptian properties are unregistered, registration is an essential pre-requisite to a purchase".

/egypt-property/3870-egypt-positive-property-investment-forecast-2007-a.html

3. What are other investors doing, and is this a safe investment for me?

Given the elapsed time since putting the deposit down and getting to this stage, I now need to make a decision to proceed within the next few days, therefore all advice and knowledge gratefully received.

Regards to all,
Lindsay.

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31 August 2007 - reply from our agent re my question on the 5 year issue:

Please find attached the information you have been waiting for regarding property registration of the Hurghada Village Apartments.

I am sorry that you have had to wait for this information.

If you have any further questions please do not hesitate to contact me.

Kind regards


PROPERTY REGISTRATION IN EGYPT

There are two types of registration for properties in Egypt, the most formal of which restricts sale and rental in the first 5 years and is rarely used by foreign purchasers. The second of these is used by investors for the flexibility to determine where and when they rent and sell their property.

We therefore will register all properties using the second method unless requested otherwise.

Regarding residency, purchasing a property in Egypt automatically gives the purchaser the right to apply for residency.

Our lawyer who has carried out the due diligence for the development has many years experience in dealing with properties in Egypt and has successfully completed many purchases without complications.

Lindsay the Investment Forecast I posted was written by a very large company who offer investment advice to their clients which is based on their experiences in Spain & Norther Europe. On this particular point I do NOT agree with them. For Investors w¡shing to flip properties in Egypt it is much more important to show proof of ownership rather than a formal registration; then let the final owner who intends to hold on to the property register if he wishes. I hope this makes your position clearer....

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Thanks for clarifying Peter. When you posted the article you didn't mention its source or whether you actually agreed with it - so I naturally assumed you did! A quick Google seems to indicate that the report is by ObeliskInternational - as you say a very large company... Nonetheless this illustrates there is obviously a lot of - sometimes contradictary - advice going around.

I'm hoping that Zeiad or someone with in-depth experience of the legal issues can summarise in layman's terms what if any risks are incurred in bypassing the advice of Obelisk and co and going the non-registration route.

Apologies for my newbie lack of knowledge and perhaps seeming pedantic over the registration issue, but I've lost money on property investments in the past through not checking what I was being told, and consequently now do all my homework before committing!

Kind regards,

Lindsay

Lindsay - Obelisk Researchers compiled the report; they have not as yet entered the Egyptian market, it is just research.

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HI

Sorry for a late reply on this but I have been in Hurghada last week.

Re your reply from your Agent, as below:

This looks very short of facts and I would treat this more as being something to be seen as "ducking the issue" rather being of any value. Where is the information on the 2nd Option ???

There is another thread on this forum that is accurate in stating the facts - there is no proven legal way to re-sell before 5 years AND to legally have a commercial rental agreement, in the way that many agents and developers are selling.
There may well be locations within Egypt where the law about 5 years etc DOES NOT APPLY, and that is the best way around this.
It is VITAL ask about any exemption from an Egyptian Lawyer, NOT an agent. Most of Hurghada falls under the normal rules where the 5 years no re-sell applies for non-Egyptians.

There is one legal way around the 5 year rules which is stated in the Law as noted on this forum, which is to apply to the Prime Minister for permission to re-sell. This has been known to work but takes anything upto a year to get approved, but once approved allows you to re-sell at any time in the future.
The issue about commercial rentals is more tricky and I suspect will only ever be an issue if the Egyptian Government decide to take action on properties that have been registered and have been identified as being rented commercially, which is then a buisness which you will not legally allowed to do unless you register as a business in Egypt and pay tax etc.

Ad hoc rentals with substantial "own use" are never likely to fall foul of this restriction.

The note about non-Egyptians rarely registering is probably true since it then makes the property known to the Government, however it is ESSENTIAL for you since it will uncover any issues of the original land not being owned by the person or company that you bought from.
ANY Laywer working for YOU, not the seller will be able to confirm, or otherwise the ownership of the land where you are buying - if you have not already been given a certified copy of the LAND REGISTRATION entry then I suggest you get this BEFORE you make any further payments - you need it in ENGLISH (from a certified translation Company) and ARABIC, then your Lawyer can check it in the Land Registry in Hurghada.

So far there has been very few properties sold to non-Egyptians that have been finished that can be registerted hence no response via this forum on this concern.

The key issue for you is that YOU need to convice the NEXT owner that the property is legally yours - you will find it VERT difficlut (but not impossible) to sell to any non-Egyptian without the normally accepted proof of ownership given by registration.
Part of your contract should state that the property is free for all debt etc, however without registation your Lawyer cannot find out on your behalf if the land already has been a HUGH loan taken out on it, which leaves you potentially open to all sorts of scams I'm afraid.

It is VERY COMMON for Egyptians to buy and sell land and property without any registration because they all accept the same risk in order to hide evrything from the Government, and avoid paying any fees or taxes.

PROPERTY REGISTRATION IN EGYPT

There are two types of registration for properties in Egypt, the most formal of which restricts sale and rental in the first 5 years and is rarely used by foreign purchasers. The second of these is used by investors for the flexibility to determine where and when they rent and sell their property.

We therefore will register all properties using the second method unless requested otherwise.

Regarding residency, purchasing a property in Egypt automatically gives the purchaser the right to apply for residency.

Our lawyer who has carried out the due diligence for the development has many years experience in dealing with properties in Egypt and has successfully completed many purchases without complications.

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As a property investor and Broker with many years experience I am well aware of the options which are open to all buyers in any new or even established markets. There is no doubt that if you spend time in any location you will appreciate the good bits and recognize the not so good or seedier areas; in general this will be reflected in the price you pay for property. There is no doubt that if you wish to live in Hurghada and live amongst the locals you can pick up property at, by Western standards, ridiculously low prices. However, you have to question your motives; if you want somewhere to live and are happy to live as the Egyptians do then that is great; I am an Egyptian myself and I absolutely love the people but, be aware, they do keep different hours! Many businesses are open 24/7 and family members come and go at all hours of the day and night; often Egyptian families eat very late and children too stay up late.
If, like me, you are not a night bird you have to ask if the area will provide the peace and quiet that you need?
As an investor the major issue is being able to prove ownership; its like buying antiques, if you know the provenance and have the paper to back it up you can sell on with confidence. You also have to make a judgement as to whether the property you are purchasing is likely to appeal to renters; for my money the Resort areas of Sahl Hasheesh, Gamsha and Zafirana are a better bet. I have already sold two properties in Sahl Hasheesh at a 70% premium on the original purchase price; I agree that as yet the rental potential is not proven but as more and more five star hotels open up I believe that there will be a market. Of course there is little to compare with at the moment, the whole market is developing; savvy investors know this and should be prepared to consider a minimum five year hold. I am convinced that in five years from now Investors like me will be glad they came on board........mortgages, cheaper flights and greater tourist numbers will all expand the market.
Just one final point, there are many posts by either new or established Developers who are not declaring their interests. We should all be aware that the market will attract people with many different reasons for wanting to get involved, lifestyle, investors, buy to let all have their own agenda. There will never be a 'one product suits all' scenario so let us accept that those of us in the business all have something to offer; we can all be proud of what we do and we all have a different perspective. Let us use the Forum to offer help, advice and constructive comment and the new Premium Section for advertising. Thats where it belongs...

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if the flights are at the same price as now into 2008 then i think egypt could be dead in the water for renting .the only thing that is making the egypt holiday are the deals the hotels are giving on all inclusives average price of flights is £350 sept £250 oct £230 nov add your rent and its starting to look expensive i think demand is up at the moment cause of people giong over to see there properties and the airlines are milking this.so will hurghada become a property hotspot for renting the jurys out and you take your chance

[quote=linzkins;13204]Hi everyone. I recently joined this forum in order to ensure I'm aware of all the known pitfalls when buying in Egypt. I recently put a £2k deposit down on one of the Hurghada Village Apartments. These are currently selling for around £30k for a one bed with large roof terrace and on the face of it looks like a good investment with guaranteed 7% annual rental return on the first 2 years.

Hi there.

There are many guarantees offered by developers who grant loans or short term repayment schemes... The Egyptian Bank rate is 12%.... Developers can borrow around this rate. They give 7% to buyers using your money and the exchange rate profits to build your property while you wait. Sometimes up to three years!!! Some Egyptian developers give interest free loans, once again using this ploy to attract client's foreign currency for the build.

My advice is to look at arranging your own mortgage through the Egyptian Mortgage and Housing Banks offering longer term solutions or equity release on your UK property through a good broker and paying the least deposit necessary. Either way registration is very important. Get the process done to prevent "side-swiping" from unscrupulous parties.

Yes, renting out as an income based investment requires a business license and full registration. Family and friends rental income, you don't. However, I do not know of any good management company outside of top Hotel complexes who fill apartments (overspill) for clients who own them. So who can gaurantee any % rental presently.

Regarding overseas registrations. the Authorities have just created an office for this. Slow to get started and I'm pushing them, but a step in the right direction.... Details to follow. The 5 year resale issue is true but not always the case as unregistered properties can be "flipped" to known contacts before full contracts are signed, rather than having to put it back in the hands of the Egyptian developer as they seem to demand or the agent's sales office at his extra commission. The Authorities' will not have processed the 2nd Judiciary documents anyhow, as I believe none have completed so far.

Remember, apartments are leasehold. Whether they are in Sinai or the mainland, they are part of a unit of apartments and share maintainance and facilities. Villas, duplexes etc. on their own land are freehold on mainland Egypt. 99 year leasehold is fine. Over that time it can be renewed for continual family ownership, as it would in the UK.

And Egyptian developers prefer transferring each registration to prospective owners so they individually pay the fees. Egyptian developers with land and development to register may be the hold up. Again costs deter them, along with recognition and tax liabilities. So full ownership registrations will always be at the completion of the complex and this could take 3 to 10 years depending on the scale of the development or resort complex. And the Ministry of Justice backlog of course.

I hope this helps.

Regards
Alan.

Hi, I have lived in Hurghada for 3 years now and I am currently working for a development company known as Kamareia Resort . Up until this time I had worked for HEPCA and Spot Red Sea both of them heavily involved with the local community here.

As far as investment in Egypt is concerned the potential for capital growth is there, as a destination for tourists from the UK and Europe there are not many places you can go to with all year round sunshine and beautiful tropical beaches. The living is cheap here and the average development property starts at about 30K. The Egyptians are now providing higher finishes to their properties in order to encourage the foreign buyer. Better to look at long term investment in this region and not short term gain. When buying an overseas investment it is a good idea not to rely to heavily on rental returns, unless you have a rentback deal with the developer or hotel on site.

A lot of the time the developer can also strike a great deal on payment terms, normally meaning that you avoid paying interest.