Investment Safety

All property investors are aware of the need to find the right property in the best location and to snap it up at the lowest price possible before others get in there before them. In the current market there are many important considerations to be taken into account when investing in emerging markets as well as mistakes to be made.

Al Rivera Investments & Real Estate Team Removes Your Worries of Making an Incorrect Decision

Information is obtained from property experts with vast experience in this sector, and then carefully tailored to your particular requirements. Advice is always given independently and with no obligation so that you are free to evaluate the information you have obtained and make a well informed and unbiased decision.
With Al Rivera Investments & Real Estate at your side, you will know all features of the real estate market in Egypt. This will enable you to differentiate between one and the other, focus, and then take your next step towards a successful property investment decision.

How to Buy a Property in Egypt?

Determine Your Requirements

This may sound obvious, but a surprising number of people buy land or a home without properly assessing their long term requirements or thinking about all the consequences of their purchase. If you want to buy a property then you need spend some time with one of our professionals who can:

Our first main goal when we meet clients is to help them understand what they want so that we can provide them with all the relevant information and locate the most suitable investment, land, villa, or any other property for their needs.

Step 1 – Determine your budget

Step 2 – What Is Your Purpose?

Red Sea Cities, especially Hurghada are beautiful exotic Cities as mentioned by visitors who come. Many travelers find themselves working or staying long term, and holidaymakers as well.
A large proportion of visitors want to buy for different reasons:

Investment – Hurghada has produced clear investment returns over the last six years, and this looks set to continue long into the future. If you are buying as an investor then you have to focus on:

Both of these will produce the best returns and the most profitable investment. If you wish to buy and hold then offer to sell in the future. Property Purchase - Most people who invest in Hurghada do so because they want to live or holiday here. This means that they want to invest via a property that they can live in. This can take the form of:

Take into consideration some of the related factors like the running expenses and rental possibilities

Step 3 - Which type of property do you want?

You have to ask your self the following questions:

Step 4 - Get to know the Town

Before you even consider looking at land and property, get to know the Town. This can be an enjoyable and informative process as there are so many beautiful places to see, fantastic restaurants, pars and many different types of entertainment such as diving activities and desert safari. Check our map and area guide, also links to other informative websites, visit locations, places of interest, great restaurants, bars, and of course, the location of our offices, just in case.

Step 5 – View different types of properties

You need to see different types of property to compare prices and other related factors like location, view, and services provided like electricity and water for example. Our Team will explain you the advantages of each property.

Purchasing Tips

According to your needs, assess the location and the view of the property.

Property Tips

Proudly, our legal department is responsible to provide you with professional lawyer for the best legal service to prepare your purchasing contract which guarantee and protect your rights. The contract will be translated to your language and stamped as well.

Investment Strategies

There are a great number of potential investment strategies available dependent on the property investors' objectives be it short, medium or long term, differing levels of complexity, as well as the investor's attitude to risk. This page provides information regarding the strategies available.
  For illustrative purposes the two most common strategies are described below.

It is important to be clear what the investment is trying to achieve AND by when it must be achieved. In this way it helps focus the investment decision. For example if the objective is to double the investment within 2 years then a flip strategy would be favored. Provided the investment has been chosen wisely it is more likely to produce the expected return than a buy and hold strategy in the chosen time period. More experienced investors may start to look at portfolio investments across different areas or countries in order to spread the investment risk and achieve a more balanced return.

Short Term Investment Strategy

This strategy involves purchasing an off-plan unit i.e. a property that has either not commenced construction or is currently under construction and then selling the property prior to completion. In reality this is not a property purchase as the property has not been completed but is a purchase and sale of an option to purchase the property. A key factor is the time taken to identify the investment opportunity as this is critical to the strategy's success.

Key Opportunity

The opportunity to purchase a property at a low initial price or in the case of a new country at potentially an extremely low initial price before market forces lead to significant capital appreciation. Then sell the option whilst demand is increasing, taking advantage of normal supply and demand economics which means the price is increasing as more people want to buy.

Timescale

Typically the time period involved will be between 18 to 24 months, although this is dependent on factors such as the stage of construction of the development, the speed of construction for that particular country, etc... Level of Complexity This strategy is attractive to the investor because of its simplicity, the low initial investment typically 10% to 20% of the purchase price and some basic legal fees. The short payback period allows the investor to recover their cash relatively quickly for reinvestment in other developments. In addition the investor has not been left with a long term liability that needs to be serviced such as mortgage payments.

Key Risks

The critical element and therefore the highest risk element to the success of this strategy is the sale of the property prior to completion otherwise the investor will be forced to complete on the purchase with all its associated legal and financial consequences. The investor must be clear on the mechanisms available to resell the option, whether that be privately through an existing database of buyers, a private advertisement, a website or through more commercial means such as estate agents, website portals etc.

Return

This type of investment is a speculation of capital appreciation and therefore returns can fluctuate greatly dependent on how popular the country, the area and even the development becomes. A good investment based on an annual growth rate of 10% could lead to returns of in excess of 50%.

Case Study:

As the property is under construction and has not yet been completed, it therefore cannot be legally registered. It has still to pass all the relevant planning directives and license requirements and as such does not provide adequate security for the lenders and therefore it is not possible to raise a mortgage upon it. The initial investment will have to be raised from the investor's own sources be it cash funds or by releasing equity from an existing property by way of a further advance or re-mortgage or alternatively bridging facilities may be available. Taxation rules are very different country to country, therefore specific expert advice should always be sought regarding the subject.

Medium Term Investment Strategy

This strategy involves the purchase of either an off-plan unit or resale property, completing on the purchase and holding onto the property for a period of typically 2 to 5 years although it could be longer, before ultimately selling. During this period the property is rented either on a holiday rental or long term rental basis in order to generate income. When considering this strategy it is important to be clear as to whether income generation or capital appreciation is the key objective and tailor your investment accordingly.
Although possible, it is extremely difficult to achieve a high return for both income generation and capital appreciation with the result often leading to average or below average returns. It is usually better to focus on one specific objective in order to maximize the return. Typically investors look for capital appreciation and use any rental income to negate the cost of financing and maintenance. Avoid emotional purchases as this type of strategy is a medium to long term investment which requires careful analysis of the returns and critically the investor needs to be able to afford the cost of maintaining and financing the investment.

Key Opportunity

The strategy is to either maximize the possible capital appreciation by holding the investment until market conditions change, i.e. sell at the highest possible price. Alternatively, maximize the income generated by the investment via rental means at perhaps the expense of capital appreciation. Additionally the property may be available for the investors own holidays!

Timescale

The time period for holding the property is typically 2 to 5 years in order to ensure there is sufficient capital growth to cover the initial purchase expenses, such as taxation, legal costs etc.

Level of Complexity

Fundamentally this is a normal property purchase therefore a very simple concept; however please bear in mind the need to maintain a second property in another country involves more management than a property close to home. There will be physical, economic and legal requirements to adhere to, ranging from basic maintenance of gardens, pools etc, rental administration, perhaps financing mortgage payments, community charges, annual legal returns and taxes.

Key Risks

Depending on whether income generation or capital appreciation is chosen one of the two key factors is the identification of a property which will be attractive for that particular strategy.
For example if the rental strategy is chosen then the type of property will determine the type of tenant. One bedroom apartments will appeal to younger singles or couples should be located near to lively nightlife locations, bars, nightclubs etc. The rental for this type of property will be lower than a three bedroom property attracting families but they require different facilities such a proximity to beaches, supermarkets, children's amusements etc. Also the type of tenant will become a factor when considering the quality of furnishings to be purchased and importantly the condition the property is left in following a rental. The location of the property is always important as it will determine the amount of rent achievable and the level of capital appreciation achievable, however please remember that the initial price of the property will also reflect this.
Secondly is to continually monitor the market to ensure that when the property is sold it does not happen during a market downturn such as a change from a sellers market to a buyers market, which would of course reduce the sale price. Please bear in mind this is more difficult to achieve when the investment is in a different country.

Return

In holding a property for a longer period it is possible to achieve more significant returns as the example below demonstrates. This of course assumes that the market growth rate remains constant. In the example below capital appreciation is the objective therefore the rental income is designed to cover the annual finance and maintenance costs. Please see the example below.

Financing

The investor must be prepared to finance the balance of the purchase either via their own cash resources or more commonly and more sensibly via a mortgage. Please be aware that some countries may not have an established mortgage market for non residents at the time of the initial off plan contract, although they may be expected to be offering mortgages to non-residents by the time the property is completed.
With this possibility in mind it is wise to be prepared to have to finance the balance of the purchase through other means, perhaps via an equity release or re-mortgage on an existing property in a different country.
The rental opportunity is highly dependent on location and may be seasonal in nature leading to high rental yields during the summer months and little or no rental during the winter months.
Some developments offer guaranteed rental schemes that alleviate this problem and more importantly remove the worry of finding tenants in the first place. If no guaranteed rental scheme exists there are specialist rental companies that will contract to rent suitable properties for at least 6 months of the year.

Investment Finance

The Financial Mechanisms for the Property Investor

Mortgages

When considering a medium or long term investment, mortgages are an extremely efficient mechanism for the completion of the purchase when the property has been finished.
In financial terms the process of borrowing funds to purchase property is often described as GEARING. When a property is highly geared this simply means that there is a large mortgage secured against the asset.

The Main Advantages in "Gearing" an Investment

The Main Disadvantages for Gearing

When considering Mortgages and Gearing it is important to consider all the options available, that is to say that it may not be the best option to look for a mortgage in the country in which the investment is being purchased. For example if the interest rates are very high in that particular country and there is another property in another country with low interest rates, then logically it would be more advisable to borrow where the interest rates are lower. In this respect it is always advisable to speak with a professional finance consultant who has experience in the countries you are considering investing in.
Please remember that your property is at risk if you fail to maintain the mortgage payments each month therefore consider the monthly repayment carefully.

Alternative Finance

Other than using mortgages for investment there are alternative methods of financing available to you, the other options to be considered are:

Cash

An obvious and simple way of financing an investment if the funds are available. In general terms however it is better not to use your own funds when someone else’'92s is available i.e. a bank. This is simply because by investing only a small amount into each investment and financing the remainder by debt then more investments can be made and therefore potentially greater return can be achieved.

Buy to let

A popular source of rising finance in many countries, this is the raising of finance through the rental income that will be generated. In other words the lender assesses the rental income achievable and lends an amount based on that rental income. Lenders will be conservative in their estimates so it is unlikely that 100% funding will be possible. In addition please bear in mind that many emerging markets do not have sophisticated financing products so this type of product may not be available.

Company Purchases

Some investors will have their own company and may consider using the company for the purchase of an investment. This can make a great deal of sense if set up correctly as an investment company, however the investments will all become commercial assets of the company and careful tax planning is required to ensure there is no double taxation incurred when trying to extract profits from the company. Those investors that have trading companies may legally use their company to invest in a property and this often appears attractive as the company may be able to raise funds more freely than the individual, but this does bring a great deal of tax issues that could affect the profitability of the trading element of the company and means the asset is at risk from the normal trading creditors, therefore it is not normally advisable to use this mechanism if an alternative is available.

Shared Investments

Quite simply this implies buying with a relative, friend or group of friends. This is often a good entry method into investing in property as it reduces the amount of cash investment required by each individual, making the opportunity more feasible to a greater number of people. When investing with others there may be disagreements and disputes therefore it is important to make an initial contract between all the investors detailing the amounts invested, the percentage returns each investor is eligible to and the mechanism of agreeing decisions. is an even number of investors which can lead to split decisions or when parties have invested different amounts.

Investment Fund Purchases

In basic terms these are individuals who come together under the umbrella of a financial advisor or fund manager to invest in real estate sector.

Equity Release

When considering financing the deposit and stage payments for an off plan purchase or the completion in an emerging country that is not offering mortgage facilities then equity release could be a viable option. Using the term in its broadest sense it is the release of the equity that is locked in an existing property either because it was originally purchased in cash or it has accumulated in value over time.
  Although in some countries the term equity release may indicate a specific type of product the principle remains the same, i.e. releasing equity.
In a rising property market the latent value inherent in the property could be considerable and this makes it ideal to be released and utilized for the next investment.
Many successful investors have used this principle to build property portfolios over previous years. This is done by either a re-mortgage (because there is an existing mortgage in place) or a new mortgage (on a debt free property) then using the cash released to finance the new investment.

Equity Release Formula

Current value of property - current loan commitment = Accumulated equity
Case Study

There is potentially $175,000 available to invest in another property or properties if creating a portfolio. This simply means investing in a number of properties rather than just one. They do not all need to be in the same development or even country so it allows the investor to spread the investments
Across different market places, thereby taking advantage of different growth rates and spreading the risk of those investments. In other words the investor is not relying solely on one development to be successful. Using the example above:
Case Study
Our investor releases 80% of the $175,000 equity available = $140,000 for further investment.
4 properties are identified:

Real Estate Projects

Red Sea coast and mainly Hurghada is full of residents who are locals from other cities in Egypt and foreigners who are from other countries.
  For that, significant profits have always been available for investors wishing to build small or large housing projects either for resale or rent. For buy and build projects put together and managed by our team, investors can expect rental returns of 25% per annum as a minimum. With our project management team, it is not even necessary to be in Hurghada.
We can put together a housing project for sale or rent and run the whole process from the land acquisition to project completion. With our experts, we know how to secure your investment and assess the profitability of the project.

Investment Return

Typically early entry into emerging markets offers the highest return on investment but, in many circumstances, this is also associated with different levels of risk.
As Al Rivera Investments & Real Estate deals with property that is primarily an investment vehicle and its only purpose should be to generate substantial returns for the investor.
It is therefore essential for the investor to understand the entire purchase procedure from start to finish, including exactly what funds are required and at what stage of the purchase, allowing for accurate cash flow analysis and maximum financial leverage.
Al Rivera Investments & Real Estate advisors can help with all aspects of your investment and recommend our professional financial partners to work with investors on strategy calculations. However we insist that every investor looks at an investment in detail and seeks advice where needed to ensure it is completely suited to their individual investor requirements. If a market is expected to offer continued growth, it is important that as an investor you understand what the "market drivers" are for this growth. Some common "Market Drivers"

Market Drivers

Location

This is always a major factor with any property investment. The location of an investment is directly linked to the return on investment an investor can expect from both capital growth and rental yields. We recommend that investors look at current property and rental prices in the direct and surrounding areas of any proposed investment to gain first hand knowledge of pricing and, where possible, they should personally visit the area.

Cost/Value

A property purchase is only an investment if it is purchased at the correct price, allowing for its value to appreciate and/or generate solid rental returns in proportion to its cost.

Economy

The economic condition of the country should be taken into account because a country or region that relies more heavily on tourism will be prepared to invest more into the infrastructure of the area to promote construction and tourism. The down side may be that too much planning consent may be allowed.

Nature of The Location

Needless to say that in the investment is primarily for summer holiday makers then the climate needs to be warm and sunny. If the investment is primarily for skiers then good prolonged snow fall is needed. Do not forget investments for businesses. Currently there are some emerging areas which have significant business attraction. E.g. Businesses looking to invest in an area by relocating production facilities due to lower labor costs etc. In these areas buy and hold strategies may be very rewarding.

Logistics

To be attractive the area must be easy to reach! Look out for new low cost airline routes, nearby airports, good road infrastructure.

Infrastructure

An excellent sign of an investment property hotspot is when there are considerable infrastructural improvements being made to an area. Generally this includes local attractions, services and amenities, but also, and often most importantly, additional airports, ports and roads, as well as secure signs of growth and firm commitment by a local government to help improve an area.

Natural Factors

These are often the most obvious "market drivers". Many locations base their bid to increase tourism and property demand on the fact that the area enjoys excellent weather conditions and can offer stunning beaches, tropical views or are positioned next to a mountain ranges offering quality skiing conditions. These factors are obviously very important, but it is essential that other "market drivers" are also considered in association with these as follow:

Tourism

Tourism is the primary factor that enables many emerging property investment locations to create a successful property market. With increasing low cost flight destinations and the world becoming effectively smaller, the door is open to many relatively unknown destinations that are beginning to offer new and exciting holiday destinations to tourists around the world. Today's tourist is after all willing to try new places after experiencing the same traditional locations for too many years.

Political Stability

With terrorism around the world on the increase and many political, religious and legal implications to consider it is essential that the stability of an investment location is considered prior to any investment. Political stability of a location can act as a very strong investment market driver.

Off-Plan Investment

Off-plan investment is defined as buying property from developers before the building is completed, sometimes even before the foundations are laid. A large percentage of property investors over the last years are interested in off plan Investment in order to increase their net income.

 Off-Plan Investment Benefits

Off-Plan Investment Tips

We specialize in off-plan investment opportunities in many locations all over the Red Sea Coast. Off-plan property is beneficial to our members because:

For more detailed information on off-plan implications, please ask one of our Al Rivera Investments & Real Estate advisors.

How can property be cheaper if bought off-plan?

The developer of any project is always exposed to risk. In order to cap this risk as quickly as possible and limit bank loans and other debts, units are sold off-plan. Prices are very low as buyers cannot see a physical property at this stage and their decision to purchase is based purely on location, artist impressions, diagrams and computer simulations.
In addition to an excellent price, the property, due to the fact that it is off-plan, allows the investor to benefit from an excellent finance structure. In some cases, a deposit of only 10 - 30% of the value of the purchase is payable. The balance is payable upon completion and can be financed by a mortgage. It is important to decide which strategy to adopt in order to achieve the required return on investment from an off-plan purchase. Our experts will gladly help you choose the most appropriate option.
They will create an investment plan, be it a pure investment or buy-to-let strategy. Gain more information by contacting one of Al Rivera Investments & Real Estate advisors. It is entirely possible to make some excellent investment choices in this arena and we specialize in helping you pick the correct ones for your individual requirements. We can assist you to generate personal wealth through safe and intelligent property investment using off-plan property as the investment vehicle.

Hotel Development

There are a number of resorts for sale in Red Sea Coast, and many people moving here wish to invest in these types of projects. However, resorts have become increasingly expensive over the last few years, and many investors are now finding these projects are inaccessible to them.
  With our local contacts and knowledge, we are able to advise on purchasing existing resorts. In addition to this, we can put in place a resort development scheme that allows you to buy land and build your own holiday resort.
Our experienced project management and financial advisory team are always delighted to discuss either purchase or development projects.

Land Development

The development of raw land by clearing, providing infrastructure and construction has been a profitable process. Take into consideration that the prices of land in the red sea coast is growing rapidly over the last few years.
This type of investment is considered less risky and guaranties money than many other types of investment. Once the investment has been analyzed and discovered to be a viable investment opportunity offering the required returns on investment within the desired timescales, the investor must be sure that the vendor is reliable and secure.
There have been many documented cases of developers taking funds for projects for which they do not even own the land title, or building permission having not been fully granted. Construction has consequently been halted, often resulting in the investor loosing all or part of the investment. The good news is that these situations can be easily avoided and Al Rivera Investments & Real Estate team works with the investor to ensure that projects we offer meet certain criteria. This ensures that all Al Rivera Investments & Real Estate offered investments are as secure as possible, allowing members the best possible opportunity to safely maximize returns from every investment. Some of the usual checks carried out are listed below:

Building License:

These licenses required prior to construction. Many projects work on a pre-release basis and these licenses may not be in operation at this stage. Al Rivera Investments & Real Estate offers pre-release opportunities to investors, allowing for the earliest possible entry into projects. In the case of pre-release opportunities, monies should be held in Al Rivera Investments & Real Estate bank account and only released to the developer when all relevant licenses are granted.

Developer Background Checks/Track record

It is important that a developer has a traceable background and experience. Often previous projects are a good point of reference to future projects. Al Rivera Investments & Real Estate will look to offer projects from experienced developers with high standards and a reputation for completing on time.

Land Title Confirmation

Obviously any developer must own the land they intend to construct on. In the past there have been cases of rogue developers taking funds from clients for properties and never having legal title to the land. This is rarely a problem today and is easily checked. It is also essential that an investor understands that he/she is buying a freehold property and that title of the land will be transferred upon completion.

Re-Assignable Contracts

Although not as common as in the past, due to the uncertainty of the investment, some investors look to operate a "buy to flip" strategy. This basically means the investor will look to place a minimum down payment to secure a property and look to resell the unit(s) during the construction process, prior to completion. In order to do this the contracts must be re-assignable and any administration fees must be highlighted. Without these factors being fully understood, the investment strategy could be rendered useless.

Fund Security

Al Rivera Investments & Real Estate looks at the buying process and ensures it is as secure as possible for investor members.

Build Quality Guarantees

All good developers offer a guarantee on construction and a detailed quality specification. Al Rivera Investments & Real Estate makes sure these qualities and their offered guarantees are to a required high standard. Building specifications are also made available to investors.

Land Price Estimation

How is the price of land determined? The following factors determine the price of land:

Mortgage Law in Egypt

Registration of a property is a major obstacle confronting the real estate finance activity, even though it is essential to get a real estate financing service. Most properties in Egypt are not registered, hence came the delay in the enforcement of real estate finance law. Al Rivera Investments & Real Estate helps the clients and presents everything they need from inquiries or procedures regarding the mortgage.
 

Terms to be Eligible for Real Estate Finance