The Egyptian government announced the abolition of the rule in force since 1996, which allowed foreigners to own no more than two properties in different cities. The new law will allow foreign buyers to purchase any number of homes. The authorities expect that this will attract foreign direct investment, increase foreign currency receipts and help fulfill obligations to international creditors.
The main incentive is Cairo's urgent need for foreign currency to pay for imports and service external debts, including to the IMF. At the same time, the government hopes to revitalize the construction sector, which accounts for more than 10% of GDP and employs up to 15% of the employed. Over the past 20 years, dozens of new cities and towns have been built in the desert, including the new administrative capital and New El Alamein. According to some estimates, about 13 million residential units have been built.
However, local demand remains weak: the average salary in the country does not exceed $ 200 per month, and housing prices have risen sharply in recent years. Many economists are talking about a possible "bubble" in the real estate market, which has arisen due to an oversupply of expensive properties aimed at wealthy investors rather than ordinary Egyptians. Opening the market to foreigners is seen as a way to "dump" this surplus, but at the same time it can further accelerate prices.
Critics warn that the influx of foreign buyers will make housing even less affordable for the local population. Fears are growing amid the already significant number of refugees from Sudan, Syria, Libya and Yemen who are settling in Egypt and creating additional demand for rental and purchase of real estate, which has already affected price increases in some areas.
The government promises to launch a special online platform to simplify the purchase procedures for foreigners, but the details of the new regulation have not yet been published. The authorities also continue to sell state assets and land plots on the coasts of the Mediterranean and Red Seas to the sovereign wealth funds of the Persian Gulf countries, hoping for additional injections.
Thus, Egypt relies on an external buyer to solve its internal economic problems. However, according to analysts, the success of this strategy will depend on the real interest of foreign investors, as well as on whether it will be possible to avoid further social tension due to rising housing prices.
Some restrictions for foreigners, however, continue to apply.Each facility cannot exceed 4,000 square meters in area.The purchase of agricultural land for its intended purpose is completely prohibited, and commercial or investment projects are subject to separate rules under the Investment Act of 2017.Geographical restrictions apply to the Sinai Peninsula (with the exception of the tourist areas of Dahab, Sharm el-Sheikh and the Gulf of Aqaba), as well as border areas, military areas and territories with archaeological heritage sites.. In addition, there is a ban on the purchase of objects protected by the law on antiquities. Finally, all transactions must be paid in foreign currency from abroad. This is a key condition without which a purchase is impossible.
