Unlike other popular second-home destinations, such as the Seychelles, Morocco, Malta, France, and Spain, Egypt’s second-home market is not dependent on international investors and appeals primarily to Egyptians, as only 2% are foreign investors, according to global commercial real estate leader Colliers International.
Colliers released its latest white paper, focusing on the Egyptian second-home market. The publication examines current market supply, demand dynamics, affordability, and key desirable holiday home spots in Egypt.
The report examines the increase in supply for second homes in Egypt along the coastline, which is the most popular destination for holiday makers who prefer staying at their own homes instead of renting a unit or staying at a hotel. The most popular hotspots for second homes are the Red Sea, South Sinai, Northwest Coast, and Ain Sokhna.
The paper reviews each hotspot destination based on the factors affecting the demand in those locations. It also focuses on the growth in second homes, especially within the coastal areas, as both a luxury and an investment vehicle.
“As the market has developed, so has the sophistication of the buyers who look to extend either their stay or rental returns from their investment,” commented Mansoor Ahmed, director of development solutions, healthcare, education, and PPP at Colliers International MENA.
He added that “to attract these buyers, developers need to look beyond the limited retail and F&B offerings, creating pull factors. These include boarding schools, hospitals and clinics, educational facilities, retirement communities, fitness and skill retreats, and rehabilitation centres.”
Colliers International is working alongside developers on creating pull factor principles that add additional revenue, while also increasing the price premium and off-plan sales.
Colliers stated that one of the key drivers for Egyptian property investment is as a hedge against inflation. The recent devaluation and currency fluctuations witnessed residential prices increasing approximately 20% (in EGP terms) year-on-year, supported by an undersupplied residential market.
“Along with the demand for primary accommodation, a second tier within the residential market has emerged over the last decade. Holiday or vacation homes have become a popular investment and lifestyle choice and will continue to grow underpinned by the volume of products and choices available to consumers, both in terms of location and price points,” said Colliers.
The most preferred locations for vacationers are the North Coast and Ain Sokhna, due to their proximity to Cairo. The temperate climate makes these areas ideal holiday destinations for many wealthy Egyptians from Cairo.
Colliers International advises investor and developer clients on holiday destinations, such as Seychelles, Morocco, Malta, Tanzania, and Zanzibar, as well as Egypt. The significant difference in these markets and Egypt is that Egypt’s second home market is not dependent on international investors. Demand for second homes in Egypt is primarily localised and focused on Egyptian households seeking holiday destinations.
A recent survey conducted by Colliers International highlighted three key points. First, most purchasers are aged 35 to 40. Second, the down payment on a second home is approximately EGP 150,000. Third, the payment plans generally span across five years, making monthly installments more affordable.
While initially second homes were simply purchased as a holiday home, significant value appreciation has attracted investors into the second home market.
This white paper focuses on the growing second home market in Egypt, highlighting the main supply and demand dynamics, desirable locations, factors that influence purchase decisions, future trends, and development opportunities.