Sunday,18 November, 2018
Current issue | Issue 1393, (10 - 16 May 2018)
Sunday,18 November, 2018
Issue 1393, (10 - 16 May 2018)

Ahram Weekly

Foreign ownership of real estate

Many foreign residents and businessmen wishing to reside or invest in Egypt want to know more about the country’s laws on the foreign ownership of real estate, writes Salma El Nashar

 

Salma El Nashar
Salma El Nashar

The real-estate sector is one of the most vital in any country with regard to its economic and urban impacts. Real-estate investment has a rapid impact on various economic activities, and it is an important factor in reviving markets for many industries related to construction and reconstruction. Moreover, the real-estate sector provides diverse employment opportunities for large numbers of workers and others in various areas of activity, thus contributing to the revitalisation of the economy in general.


Various laws define the rules, conditions and restrictions on the foreign ownership of real estate in Egypt in terms of areas of ownership, space and the periods of use of such properties. Given the advantages and restrictions governing the sector, many foreign residents and foreign businessmen wishing to reside or to invest in Egypt are interested to know more about these laws and their contents, together with the restrictions and advantages they contain.


Tourist areas have a number of advantages, as stipulated by Ministerial Decree 548 of 2005, which states that foreigners should be treated as Egyptians, after the approval of the concerned authorities, with respect to units they “own” for residency purposes in certain development and tourist areas, including Sidi Abdel-Rahman, Hurghada, the Red Sea and Ras Al-Hekma.


Foreigners may have a usufruct right to units in Sharm El-Sheikh for residency purposes, after the approval of the concerned authorities, for a maximum period of 99 years. The legislation takes into account the impact of the real-estate sector on tourism in Egypt, as it is one of the most important sources of national income.
As for foreign companies and in regard to the importance of their presence and effects on the investment climate in Egypt, according to Law 94 of 2005 such entities and companies have the right to own the land and real estate necessary for the commencement of their activities or its expansion regardless of the nationality of the partners or shareholders, except land and real estate located in areas determined by the decrees of the council of ministers in the Sinai Peninsula or in strategic areas.


Ministerial Decree 350 of 2007 prohibits foreign entities and companies from owning any land or real estate in the Sinai Peninsula, including areas located in the governorates of Suez, Ismailia and Port Said. However, some exceptions have been granted, and land and real estate located in the Sinai Peninsula may be exploited by foreign companies and entities by means of a usufruct right on three conditions.
These are that the contract is restricted to a maximum period of 99 years, that the approvals of the Ministry of Defence, the Ministry of the Interior and the General Intelligence Agency have been obtained; and that the materials and installations erected on the land granted under the usufruct right are transferred to the original owner of the land at the end of the term of the contract, according to Law 95 of 2015.


Finally, restrictions on the foreign ownership of real estate for residency purposes are determined by Law 230 of 1996 regulating the ownership of built real estate and vacant land by non-Egyptians. Foreigners do not have the right to own more than two real-estate units in Egypt for residency purposes, each of which may not exceed 4,000 square metres. In addition, the owned real estate may not be heritage buildings.


The said law also stipulates that a foreigner who has acquired the ownership of vacant land must begin construction on it within a period not exceeding five years from the date of notarisation of the land-purchase agreement and may not dispose of the owned real estate before the expiry of five years from the date of the acquisition of the real estate.


It is thus clear that the restrictions and advantages of Egyptian legislation regarding the ownership of real estate and vacant land by foreigners go hand-in-hand with global investment trends and standards while respecting local criteria and limitations.


The writer is attorney at law.

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