A Guide to Buying Off-plan Property in Egypt
by Admin on March 06, 2019
Property investment opportunities in Egypt are diverse and some of the best deals are to be found in those developments that are still in the 'off-plan' phase. As it currently stands, the country has introduced new reforms to make overseas investment more appealing. Recently, the Egyptian government announced that it will offer residency permits to foreigners who acquire property. Under the new law, a one-year residency permit will be granted to foreigners who buy a property for as little as $100,000. The aim is to attract more foreign investment into Egypt’s already booming property market, enabling foreign home buyers to take advantage of the many luxury resorts that are being developed.
For those developments that are still classed as 'off-plan', this means that investors have a chance to take advantage of some excellent deals. However, as with all things investment related, it is always worth carrying out as much research as possible as well as gaining access to an unbiased property consultant. They will be able to provide you with their understanding and knowledge of the market as well as advise you on which developers that you can safely purchase from and those you should avoid. This will enable you to make informed decisions, ensuring that you make a sound investment that pays off in the future.
So, if you are thinking about investing, our guide to buying off-plan property in Egypt is a good place to start.
You can make significant savings and returns
When you choose to purchase off-plan you are likely to pay a price that is lower than that of a completed property. This is all down to the developer attempting to start earning money on their investment as early as possible into the process. It also works well for developers if they have already managed to sell a number of properties prior to beginning construction. Of course, if you are buying off-plan and at a lower price then you have a greater chance of seeing a return on your investment once the development is complete or at least underway.
You won't need as much money in the initial stages
When you decide to invest in off-plan property in Egypt, you will have the opportunity to benefit from competitive payment plans. Some developers are now offering payment plans that start from 0% down payment as well financing for up to 10 years with no added interest. Many developers will guarantee that handover will take place within two to four years and this will often be included in the contract. If they do not meet this obligation, and should there be a delay, they would agree to pay compensation. By the time handover takes place, it is common for many buyers to have paid as much as 50-60% of the unit’s total price. Therefore, they will then have to pay the outstanding balance over the period that remains according to the payment plan.
Completion dates might be delayed
Buying off-plan offers so many benefits such as being able to choose your desired unit, having input into what features the property might have as well as make significant savings. However, while the benefits cannot be denied, developers will often lure in investors by providing them with assurances that the property will be completed by a specific date. This is likely to get investors excited but in reality, there is a chance that the completion date could be delayed, which means you will not be able to make full use of the property on the date that was originally planned. For many, this might not be an issue but for some, it can cause significant problems, especially from a financial perspective. Therefore, if you make the decision to invest in an off-plan property in Egypt, it can be extremely beneficial to you to seek guidance from a property consultant. They will have a clear understanding of which developers are trustworthy and have a good track record of delivering on time.
Consider how you register the property
One of the things you will need to think about is the duration that you want to own the property for as well as whether you have plans to rent it out. In Egypt, there are two ways in which you can protect your property ownership. The first option is to register the property while the other is to obtain a certificate of validity, which will mean that your purchase contract is legally recognised. However, off-plan investors will only be able to register the property once the full price has been paid, which in some instances will be several years after handover, depending on the payment plan in place. During this time the owner can rent or sell without being governed by any restrictions. If you choose to register the property, then you must be aware that you have to own them for a minimum of five years. This means that during this time, you cannot sell or rent the property. While this might sound restrictive to some, it is the most secure way of owning a property, however, the conditions can cause difficulties for foreign buyers. There is some hope for foreign investors looking to purchase property in Egypt. The government is currently reviewing the law on foreign ownership with the intention of removing any restrictions in an attempt to make purchasing property more appealing to foreign buyers.
Properties can only be sold by legitimate developers
When the time comes to purchase off-plan property in Egypt, it is worth recognising that all developers have to be classed as legitimate developers. Therefore, they are legally not allowed to advertise a property in the media if they are not registered with the correct authorities. The idea behind this is to make the whole process more transparent and honest, ensuring that both buyers and genuine developers are protected.
In recent years, purchasing off-plan properties has garnered a lot of negative media interest but these drawbacks still do not take away from the fact that it still offers exceptional investment opportunities. Off-plan property offers the keen investors, particularly those with little experience, enough time to put financing in place to pay for the property over a number of years and in line with their chosen payment plan. This means that they do not have to pay the full amount upfront or take out a mortgage. An investment of any sort comes with risks but when it comes to property, it is all about identifying a credible developer to buy your property from.
Research the builders and developers
As an investor, you have every right to carry out as much research as you require to help you make an informed decision on whether the purchase is right for you. Therefore, it is worth asking yourself a number of questions:
Is the developer established and well-known in the market?
Have they built any similar developments previously? If they have, is the quality up to standard and are the current owners satisfied with their purchase? Would they recommend the developer?
Was the project completed in line with the agreed completion date?
The importance of carrying out your research cannot be highlighted enough because you could unearth some vital information that helps you to make the right decision. Do not be afraid to ask as many questions as you need to and then ask more again. There is no harm in obtaining as much information as possible because you are, after all, considering purchasing a property overseas and off-plan. It is also worth considering just how honest and open the developers or agents are when it comes to answering your questions. If you feel like they are holding something back, then keep seeking the answer until you are satisfied.
Confirm who owns the land
When it comes to land ownership and the sale of property in Egypt, it is vital that you check and validate whether the vendor who is selling the property actually owns the land. You should also check that the contract between yourself and the developer clearly indicates that you will become the owner of the land once the purchase has been made. In fact, it is worth noting that most developers will make it clear in the contract that a section of the land that corresponds to the unit area being sold will be put in the name of the buyer. So, it is always worth ensuring that this is clearly identified in any contract or agreement to remove any element of doubt or chance of problems in the future. If you are aware that the land is not included in the sale and you are satisfied, then ensure that detailed terms are written at the time of purchase. These terms should relate to the right to use and set out what happens should the owner of the land choose to sell.
Think about the location and the future
When you purchase a property off-plan, the location is one of the hardest considerations you have to make. A development that is under construction can be hard to visualise and so, to try and look ahead to see what the area will be like can prove difficult. However, you need to try and envisage what the area will be like once the property is completed and even as far ahead as when the entire development is completed. You might believe that you are purchasing a property with wonderful sea views or masses of green landscape surrounding it, but will this always be the case? Is it possible for another development to spring up in front of or next to your property, meaning that you lose your view or its surroundings? This is where you really need to think about the location of the property, what you want from the property and what could potentially happen in the future.
There are financial risks
Most investments carry risks and any investment you make in a property will certainly be open to risks. The property market can change very quickly and that could lead to fluctuating prices. At the moment, the property market in Egypt is stable and there are no immediate concerns about falling prices, in fact, prices are still rising. What is worth noting is that the value of the property can be affected by the changes to the currency exchange rate. To reduce the financial risks associated with investing in off-plan property, it is always wise to see if you can make savings in one area of the transaction. One thing that investors should consider is the increase in supply of property and not enough demand. This makes it important for investors to select a development that is unique and positioned in a desirable location. They should also look at the units and identify the positive aspects such as the available amenities, view, water features and space layout. This will then make the property easier to sell after completion.
Seek advice from a property consultant
When you do decide that you want to invest in a property in Egypt, you have to obtain the right advice throughout the entire process. This means that you should use the services of a reputable and trustworthy property consultant. They will have the ability to provide you with impartial advice and will have experience of working with all developers. Their extensive knowledge of the market will enable them to provide you with guidance that relates to the developers you should choose and those you should avoid. Once you find yourself in the position to purchase a property and you are ready to sign all the relevant contracts, it is always worth seeking the advice of an independent solicitor, particularly if there are areas of the contract that are not clear to you.
When the time comes to purchase property in Egypt, you should always do as much research as possible. Obtaining the correct information will enable you to make the right decision at every stage. To give yourself a greater chance of making a successful and safe investment, you should use the services of a property consultant because they will have your best interests at heart. Finally, determine that the development is legitimate in every possible way, this will protect you and ensure that you do not become a victim of fraud or criminal activity.
Investing in an off-plan property in Egypt should be a process that is carried out with due care and attention. Through the right research, information and legal advice, it will undoubtedly become one of the best investments you ever make. The property market in Egypt is booming once again and many developments are now enabling investors to take advantage of stunning locations and properties at an affordable price.
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