Do not buy an apartment in installments in Hurghada! 

The dangers and risks of shared-equity construction in Egypt. 

Property prices in Hurghada have increased significantly over the past year. Apartments at affordable prices rarely appear on the housing market, and as a rule, disappoint potential buyers upon inspection, but the budget is limited. Inflation, inflation, and more inflation… That is why many, despite their doubts, invest in shared-equity construction on the Red Sea. 

All developers draw beautiful pictures of future housing and offer "profitable" or "interest-free" installments. Needless to say, 90% of apartments are not rented on time, and the interest is already included in the cost of housing! It's not for nothing that when paying in full, the discount is 10-20, and sometimes 30%!

90% of the apartments in Hurghada that are being purchased under construction are not rented on time, if at all. Penalties for late delivery of an object are usually minimal, if at all specified in the contract. Moreover, in order to receive these fines, you need to file a lawsuit, feed lawyers for several years who will go to this court and represent your interests, and if the court decides positively, pay the state 5% of the assigned amount. And then file a lawsuit AGAIN, this time to recover funds, and pay lawyers again, and so on in a circle.…

Since most developers prescribe amounts in Egyptian pounds in contracts, the fine will be in pounds, even if the exchange rate increases significantly by that time, and you paid for the apartment in foreign currency. Of course, you'll get the money in the end, but will the cost of getting it and the nerves pay off? 

Delays in housing construction in Hurghada range from several months to decades. There are many public forums on the Internet about the unfinished buildings of Hurghada and the chats of the affected shareholders. One of these projects is the Manta residential complex opposite Dream Beach, where buyers have been waiting since 2010! And the cart is still there.

But this is a very sad story. The average delay rate for housing delivery in Hurghada is from 2 to 5 years. Thus, promising programs like get the keys now and pay later don't work. Super-offers with the delivery of the object in a couple of years and a payment schedule for 5-10 years turn out to be a dummy! In the best case, apartments are put into operation just after the loan is paid in full. Therefore, when deciding to buy an apartment in installments in Hurghada, in addition to carefully checking the contractor's reputation, you just need to be prepared in advance for a later housewarming.

Another problem when buying shared-equity real estate in Egypt is the square footage of the purchased housing. The actual area of an apartment in Hurghada NEVER matches the one stated in the documents! Developers proportionally, and sometimes disproportionately, divide the square meters of the house territory, entrances, corridors, stairs into all apartments, and add them to the actual square footage. Thus, the actual area of the apartment may differ from the written one by 10-50%. This is the norm! But…

In the secondary real estate market of Hurghada, the price is indicated for a ready-made object, most often with furniture and appliances. You can enter such apartments, see and experience the real footage in person. And only then make a decision. But when buying an apartment under construction, you can see it only after receiving the keys. And as a rule, the number of square meters of air bought and paid for with their hard-earned money shocks the "happy" newcomers. There's nothing you can do about it, just accept it. And take it into account when choosing a property.

So we've come to the most important thing: getting the keys. And that's really the most important thing. According to Egyptian housing legislation, upon completion of construction, the developer has the right to recalculate the actual costs of the construction of the facility, and if the amount exceeds the amount paid by the shareholders, he can collect it, but only before handing over the keys.

 If the shareholder is not ready, does not want, does not agree, cannot (it is necessary to emphasize) pay the stated, as a rule, far from humane amount, the developer can terminate the contract and return the money to the shareholder with a five percent fine! Everyone has arrived! And this is at a key rate of 23%!  And this is the Law!

It is very convenient for the development of the construction industry. Why would a developer take money from a bank at 23% when they can take it from shareholders at 5%?

The only more or less safe option is projects involving government agencies such as the army or police. They build quickly and deliver on time. 

It is also very important to clarify the status of the land under the project: has it been fully purchased or sold on credit?

The conclusions are self-evident: the best option for buying real estate in Hurghada is ready-made housing. If finances are limited, it is better to buy something smaller or simpler and put it in for the same 2-3 years, instead of waiting for the construction to be completed. The average rental price in Hurghada is about 1% per month of the property value. In three years, for example, you can earn 30-40% of the initial cost. Plus, the property itself is increasing in value! In three years, you can resell, add profit and buy the apartment of your dreams! Ready-made, maybe even furnished and with minimal risks.

And for those who still invest in shared-equity construction, there is only one piece of advice.: check the developer carefully! What projects did you submit and when? With whose money is he building? Construction quality and residents' reviews. If the developer is very VERY large, this is not a guarantee of security! Sometimes a small company that builds its first small house turns out to be much safer than a powerful construction giant, because it builds on its own. 

And read the contract carefully. Recently, it has become fashionable to add a clause stating that you can sell an apartment in the future only through the developer, paying him five, ten, etc. percent! And this is a very bad point! But more on this in our next article.