Knight Frank: 94% of Islamic Gulf hostages wish to invest in the Egyptian real estate market

94% of Gulf Cooperation Council investors with investments exceeding $1 million are interested in purchasing real estate in Egypt, with 56% of them planning to do so within the current year. This follows from the report "Egypt as a Destination" from the international consulting company Knight Frank.

In recent years, Egypt has become a key destination for investment from Arab Cooperation Council countries. In 2022 alone, there have been significant investments in the country, including a $10 billion investment in ports from the United Arab Emirates, a $300 million investment from an Egyptian-Kuwaiti holding company, and a $15 billion investment from the Saudi Arabian Public Investment Fund. This trend continues in 2023 with a US$1 billion investment by Emirati Sky Real Estate. In addition, an Egyptian-Kuwaiti holding company has invested US$170 million this year, confirming Egypt's growing financial attractiveness as a preferred investment destination for institutional investors from the Arab Cooperation Council, which has allocated up to US$118 billion for real estate and infrastructure investments between 2021 and 2023. The Knight Frank report also indicates that 16% of Egypt's total domestic product depends on real estate and construction, making this sector particularly important next to oil and gas (24% of GDP) and tourism and hospitality (12% of GDP), which coincides with the recovery from the period of economic challenges faced by the rest of the world.

Faisal Dorani, Partner and Head of Research for the Middle East and North Africa region, explained, "It is no surprise that the residential sector is the preferred sector among Arab Cooperation Council investors, where 68% of them are looking to buy a home in Egypt, and this is a time-honored experience for many of them, as 60% of Arab Cooperation Council investors have at least one home in Egypt." "It is also interesting to see how Arab Cooperation Council investors are exposed to the behavior of their governments, where 72% of them are focused on buying a second home or vacation home in Egypt, and 49% of them are expected to complete transactions within the next 12 months."

Regarding overall targets, the majority of investors from the Arab Cooperation Council named Cairo and its suburbs, including New Cairo, Central Cairo, Sheikh Zayed and the New Administrative Capital, as the most attractive investment destinations with a 73% share, while the North Coast is the main target for Saudi (41%) and Qatari (41%) investors. Dorani added: "When it comes to popular vacation destinations, the North Coast is the preferred destination for Saudis (41%), Qataris (41%) and Emiratis (37%), while Sharm El Sheikh tops the preferences of Omanis (27%) and Bahrainis (27%).

The Knight Frank report also draws attention to the differences in buying motives, where Emiratis are more interested in buying for investment purposes (43%), while the majority of Qataris (55%) are looking for a vacation home and Omanis (47%) focus on buying property to rent out. Zeinab Adel, partner and director of the Egypt office, said: "The secondary real estate market in Egypt is attracting the attention of investors from the Arab Cooperation Council, especially given the significant supply shortage. For example, residential properties of branded projects offer investors the opportunity to obtain a certain lifestyle, including additional benefits such as belonging to a luxury brand and, of course, world-class property management. 35% of Arab Cooperation Council investors prefer to rent out their homes when they are not being used for personal purposes, which confirms the importance of this sector."

"Furthermore, with prices starting from around US$300,000, the branded real estate market in Egypt offers excellent value for money compared to other major international locations."

The study also offers a more detailed look at expected returns from investors. The data shows significant differences in expectations by nationality. The majority of Omanis (40%) believe that rental income returns in the range of 2% to 4% can be achieved, while the majority of Qataris (27%) and Bahrainis (37%) expect rental income to be between 6% and 8%. Overall, 49% believe that rental income will be between 4% and 8% of their property's rental transactions.