Foreigners can no longer pay for Egyptian property in local currency

Amendments to a 1996 property law were approved by the country's Cabinet as it seeks to boost foreign investment

A currency exchange office in Cairo. Egypt is grappling with a shortage of dollars. EPA

Foreigners seeking to buy property in Egypt must now pay for it in foreign currency, as the country looks for ways to boost foreign investment.

At its weekly meeting on Wednesday, the country's Cabinet approved amendments to a 1996 property law that allowed foreigners to purchase homes and land in Egypt.

Despite previously being allowed to pay for real estate in the local currency, foreigners will now have to use foreign currency as Cairo intensifies efforts to drum up investment from overseas.

The amendments, which also stipulate that foreigners must deposit their payments through a fully state-owned bank, could drive up real estate prices in Egypt, Medhat Nafea, an economic analyst and deputy to Egypt’s supply minister, told The National.

“There is a surplus of real estate in Egypt, so, assuming that there is demand from the foreign end, which the very act of amending the law suggests there is, then we can expect real estate prices to go up,” he said.

“Additionally, the removal of the restrictions on the number of properties and their size will most likely result in more homes being owned by foreign nationals overall.”

The vast majority of foreigners who will benefit from the changes to the law will most likely be GCC citizens, according to Mohamed Ragab, a financial and economic analyst.

“GCC companies are Egypt’s biggest investors and many have set up companies here, so I expect them to constitute the biggest buyers of real estate after these amendments. I don’t expect many citizens from Western countries will be as interested in purchasing property in Egypt,” he said.

A continuing economic crisis – triggered by a sharp rise in global food and energy prices on the back of the Ukraine war – has depleted Egypt’s foreign reserves and led to a shortage of dollars, leaving the country’s import-heavy economy hamstrung.

With inflation at a six-year high and expected to continue rising, the government has come up with several measures in recent months to promote more foreign investment in its various sectors.

In May, the Supreme Council of Investment, a once-dormant government body formed in 2017 and reactivated earlier this year, announced that it had agreed on 22 decisions to promote private sector participation in the economy, without revealing details.

During the same month, the Cabinet also approved a number of economic and legislative amendments after complaints that there was too much red tape for non-Egyptian companies to set up shop.

The amendments are intended to speed up the formation of companies, acquisition of land and issuance of state permits to foreign investors and private sector companies.

Egypt last year announced a large-scale state asset sale meant to boost foreign investment.

The initial public offering programme, through which it has pledged to sell at least 32 of its companies to foreign investors, has not yet been completed.