Egypt's currency dilemma spurs real estate export revival

Muhammed Khalid , Thursday 30 Nov 2023

The Egyptian government is wrapping up an initiative to sell real estate units in foreign currency to foreigners and expats to boost real estate exports and secure more hard currency amid a severe shortage in the US dollar supply.

Real estate export.
Cairo. AP.


“The real estate export initiative is integral to the economic system, but the government has to first resolve the foreign currency crisis. Furthermore, the challenges associated with currency inflow and outflow may deter prospective buyers and significantly impact foreign investments in real estate,” member of the Real Estate Investment Division Alaa Fikri told Ahram Online.

Egypt is currently experiencing a severe US dollar liquidity crunch after the war in Ukraine caused investors to withdraw approximately $20 billion in hot money from the Egyptian market as they sought higher interest rates elsewhere.

The government in its turn announced a plan to collect $191 billion through 2026 by increasing revenues from multiple foreign currency streams, most importantly remittances.

The Egyptian government and state-run banks launched initiatives to lure expats into injecting more hard currency into the economy.

These initiatives included the zero-customs car import initiative and the special package of loans and pensions.

Remittances, however, fell by almost 31 percent year-on-year (YoY) to $22.1 billion in the fiscal year (FY) 2022/2023, thus exacerbating the situation.

“Buying real estate in foreign currency would further deduct from Egyptians’ annual remittances rather than increase their investments in Egypt,” Fikri said.


Tourism is the key

On the other hand, Fikri believes that tourism plays an essential role in promoting real estate exports. Such exports entail, however, expanding direct airline routes to Egyptian tourist destinations.

He added that the government should provide tourists looking to buy property abroad with incentives.    

“Some countries [in the region] attract up to 50 million tourists annually and boast extensive airline connectivity to various global cities,” Fikri noted.

In FY2022/23, Egypt's tourism revenues hit a record high of $13.6 billion, up 26.8 percent from $10.7 billion in FY2021/2022, according to data released by the Central Bank of Egypt (CBE).

However, the Israeli war on Gaza has affected tourist reservations to some degree, especially in Sinai.


Real estate product

The Egyptian real estate market, with projects valued at half a trillion dollars, has great marketing potential.

It is also the second largest in the Middle East and North Africa.

According to German data collection platform Statista, the Egyptian real estate market is projected to rise substantially, reaching $1.32 trillion in the year 2023.

In 2024, the market is expected to rise again to $1.45 trillion, and in 2025 to $ 1.59 trillion.

By 2028, the market will cross the momentous $ 2 trillion, according to Statista.  

To capitalize on the market’s great potential, developers should focus on the quality of the real estate product, according to Engineer and Real Estate Expert Abdul-Majid Gado.

“To that end, various criteria should be taken into account, including applying sustainability standards, currently in demand worldwide,” Gado advised.

The expert highlighted that the government should impose tighter legal regulations in overseeing the market and ensuring property protection.

In August, the Egyptian cabinet approved a draft law to establish a national electronic database for real estate to provide the government with a simplified way to register millions of Egypt’s unregistered old buildings.

Furthermore, the Egyptian cabinet approved a law in July allowing foreigners to purchase real estate without restrictions.

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