Are we about to see a boom in foreigners purchasing real estate in Egypt? Earlier this month, the Madbouly Cabinet signed off on legislative amendments that will allow foreigners to acquire Egyptian citizenship if they purchase state-owned or privately owned assets. The legislative changes are expected to spur a boom in real estate “exports” — i.e. foreigners purchasing real estate and land assets in Egypt, after years of lobbying for the government to push this portfolio forward. Real estate developers and other stakeholders Enterprise spoke with see these developments as a clear chance for the sector to begin recouping some of the losses it has suffered over the past several months amid volatile economic conditions.

REMEMBER- Construction and infrastructure players, which rely heavily on building materials that have seen dramatic price increases, have been under pressure over the past several months as they cope with shortages, the devaluation of the EGP, and expensive financing.

What are these legislative amendments? The new rules allow non-Egyptians to acquire citizenship if they purchase assets worth no less than USD 300k using USD from abroad. They can also establish a solo or joint investment project with an USD 350k investment in addition to depositing USD 100k into the state treasury. Foreigners can also get in line for citizenship by depositing USD 500k into a zero-interest account at an Egyptian bank. This would be refunded after three years in EGP based on the exchange rate at the time. Alternatively, they still have the option of making a USD 250k non-refundable deposit into the state treasury.

These new rules could breathe new life into real estate developers, which have been facing multiple headwinds in the past period that have threatened to push many companies out of the market altogether, head of the real estate division of the Federation of Egyptian Chambers of Commerce Tarek Shoukry told Enterprise. Pushing forward these amendments to reel in foreign investments has been a key demand from real estate developers, said Shoukry, who lauded the government for enacting the changes.

This push is particularly likely as the new rules are addressing key problems that existed previously, including reducing the capital requirements, which House Housing Committee Undersecretary Amin Massoud told us were “too high” previously. Under previous rules, foreigners were required to purchase property worth at least USD 500k while the minimum three-year refundable deposit was set at USD 1 mn.

What now? Real estate developers are waiting on the government to begin implementing the new rules and expediting the necessary licenses and documents, Shoukry told us. Foreigners have a 12-month period to transfer the capital for the asset purchase, and will only be eligible for citizenship after that period. Although this time period is typically shorter in other countries that offer similar schemes — usually 4-6 months — it is more important that the procedures be clear and straightforward than it is to shorten the process, Shoukry said. The government should also capitalize on cases in which foreigners have completed the process and use them to further promote the scheme, he suggested.

Industry players want to start seeing expos to market the real estate assets Egypt has to offer, particularly by hosting these expos abroad to attract more foreign investors and reel in FX income, Daker Abdellah, a member of the Contractors Union, told Enterprise. Similar expos have proven effective and successful for several other countries, with the sale of real estate assets to foreigners acting as a lifeline for economies during volatile conditions, said Massoud.

So, how much money could we see flowing in from these real estate sales to foreigners? Shoukry expects that the new rules could unlock somewhere between USD 3-5 bn in inflows within the next year, provided the procedures for licensing and documentation are facilitated. Besides providing the country with much-needed FX, these inflows would also be critical in helping the industry offset some of the losses it has incurred as a result of the EGP devaluation and rising input costs, Shoukry noted.

But there are also some steps that need to be taken to ensure the scheme’s success: The government should issue certain regulatory decisions, including setting quality standards for assets that are eligible for the scheme and granting quality assurance certificates to select companies and developers that meet these standards, suggests Beta Egypt Chairman and member of the Federation of Chambers of Commerce’s real estate division Alaa Fikry.

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