The Consumer’s Guide to Buying Primary Real Estate in Egypt: How to make a profit and avoid the wrong developer

After my most recent article (link here) I got a lot (read: more than two) of comments and questions about certain issues and problems people faced, despite the lack of a bubble. After some persuasion from a certain "Mo Tasem" I decided to do some research; a small quick online survey later I got a clearer picture about what people are worrying about, which I’ve been blindsided by working, living and investing in a trusted developer to not seeing.

That being said, I set out trying to create the perfect buyers guide to Egyptian real estate. So in today's popular “listicle” fashion here is my opinion on The top 5 things to look out for when investing, buying, or living in real estate in Egypt directly from the source (known as primary real estate), I do realise that the resale market is quite different, but thats a topic for another article.                                           

1.        Developer over land: During the past couple of decades there are those of us that have decided to purchase their own plot of land (outside the developers) and build their own homes, or leave it to appreciate in value. To cut a long story short, the billion pound investors have figured out the most cost efficient way to build your home, and control the outcome of such buildings. Developers also remove your responsibility with the government to build and deliver on short notice, thus removing that additional stress of losing your investment due to new regulations. ALWAYS choose a developer over developing your own home. 

2.        Developer over location: the first rule of real estate is location, location, location and I couldn’t agree more, except when in comes to choosing the right developer. Some developers have acquired what seems to be the perfect location in Egypt. While that can be quite tempting, the credibility of the developer comes in higher regard and importance. While location would guarantee you a better ROI on your investment, an untrusted developer would lead to delays in delivery, and bad facility management which essentially means you will not have a home to appreciate for a long time. And what is an investment/home if you can’t sell/live in/rent it as early as possible. ALWAYS choose a trusted developer with a track record of delivering on time.

3.        Community over developer: one of the biggest mistakes I see happening with many customers (and developers) is that once they have a successful project, they tend to get lots of attention, which brings in many investors and creates an exponential growth in prices and demand. This sometimes leads to a majority investor-owned projects. Investor-owned projects create a delay in actual value of projects, since the investors usually hold on to their units, until they find the right client, which creates “ghost compounds”. Eventually all units will reach their end user and have their appreciated value, it just will take longer. ALWAYS choose a project with a community of (like-minded) end users more than investors.

4.        Community over price: with over half of the people surveyed looking to create a secondary source of revenue by renting the unit they are looking to purchase, finding the right community becomes of higher importance. A thriving community of businesses and educational institutions (schools, universities, etc) provide the potential for local and international renters. This should come as a priority over other projects that may be more suitably priced, yet with no surrounding community. ALWAYS choose a location with a thriving (or potentially thriving in the future after delivery) nearby community.

5.        Services over all: no matter how luxurious, well designed or well located a project is, it is nothing without its services. Many great projects ended up becoming “ghost towns” due to lack of services. In a country like Egypt, where governmental services and informal services have become unbearable, people have started looking to private companies for their needs, these new developers have become their projects own government in their own right, and without these facility & community management services, these mini cities quickly become unliveable. Services such as the facility management services that provide policing (security) planning, and day-to-day needs of the community that will eventually serve the customers that are living in these projects. ALWAYS choose a developer that has a history of great customer service and facility management.

Essentially there is no perfect investment, the great ones require more money and more cash loaded payments. However, if you are looking for a guaranteed investment strategy, these five points will keep you in the safer zone where the possibility of getting ripped off, devaluing your investment, or end up with an unusable asset is drastically reduced.

If you have your own Do’s & Don’ts on real estate, I (and I'm sure many others) would love to hear them.