Why Palme Royale Resort Hurghada Impressed Me
Filed Under Hurghada property · Tagged: Al Ahyaa, Front Line Hurghada Property, Hurghada property, Palm Royal, Palme Royale Resort
Palme Royale Resort in Hurghada is just announced in pre launch and will sell fast. Surprised to be reading this in this economic climate? Then read on.
With pleasant daytime temperatures of 28 to 30 degress C, it was a shock for me landing in the UK. It was cold. The cold like you remember in school shorts in winter.
I was not arriving in a ski resort. But UK in late October - just one degree centigrade and snow. The point is that Hurghada does what it says on the tin. Its like summer all year round. Where else can you go within 5 hours of most european capital cities and guarantee this weather?
Property Review Process
It is always thought provoking work for me reviewing a new development. In the emerging markets of Hurghada and Sahl Hasheesh its not getting easier. The property choice is getting larger. Finding long term safe value, as apposed to the cheapest, can seem like a huge challenge. However, there is a way that helps investors decide a lot faster than you can imagine.
I call it a Property Due Diligence Process and encompasses location anlaysis, legal, viewing, rental and support.
So again, I used this process when viewing properties. View it for free yourself in “What Everybody Ought To Know About Property Due Diligence”, free for all email subscribers to my newsletter. The job of selecting the best properties is made a whole lot easier. You will avoid common mistakes. Mistakes such as automatically assuming that the cheapest gets the best rental yield.
Economic Growth. Not Recession.
OK, I know its hard to believe Egypt has such good prospects. But consider this; Finance Minister Youssef Boutros-Ghali has just announced predictions that the country’s growth will slow to 6% in the current fiscal year, after three years of more than 7% growth.
At a conference in Cairo on October 21st, Prime Minister Ahmed Nazif stated that the Egyptian banking system was in better shape than many other countries, due to the reforms of the previous years and a regulatory framework that has limited the amount of borrowing for Egyptian banks.
Many analysts agree with the view that the Egyptian banking sector might largely avoid the international turbulence. “The overall impact on the Egyptian banking sector will be limited, when compared to what is happening in other countries,” Reham El Desoki, senior economist at Beltone Financial, told Oxford Business Group. “There seems to be enough liquidity, and the inter-bank sector appears to be working.”
Occupancy Rates
With near 100% occupancy on beach front properties and with the World Travel and Tourism Council (WWTC) predicting a 5% tourism in Egypt in 2008. The latest forecast are for 14 million visitors in 2008. Trying to get a room in Hurghada tells the story. Increasing room rates, from a low base, is now the result.
Lets also consider that with political stability and strong economic growth, the rapidly growing Egyptian middle classes are driving high occupancy. Sometimes you have to just look around.
I got chatting to a couple in the Marriott hotel. They were Egyptian. It turned out they were holidaying on their honeymoon. The new Egyptian middle class is growing fast. The very diverse nationalities of other guests is also apparent. Wealthy Middle Eastern visitors and a huge Eastern European and Russian holiday makers are fuelling much of the tourism growth here.
Rental Yield
I’ll leave detailed analysis for another time on rental yields. However, there is just one major point to consider when thinking about yield. That is year round occupancy.
Virtually every location proclaims its year round attractions. Except the reality is usually five peak weeks. Hurghada has all the usual summer peak times but has eight other major holiday weeks.
You don’t get these peaks week rentals to anywhere the same extent in Spain, Cyprus, Greece, Malta, Morocco, France or Italy. Why? The air and sea temperatures are not warm enough. You risk rain. Hurghada and The Red Sea Riviera may get a very light drizzle for 5 minutes once a year.
So renting in Hurghada you get October Half Term Holidays (two weeks), Christmas, New Year, February half Term holidays (two weeks), Easter, early May holidays. Think how this impacts on your rental. Hurghada at its coldest is January, followed by February. Permanent sunshine, 18 to 23 degrees. There is little competition to the Red Sea Riviera that covers all these times within five hours flight of most European Capital cities.
But its the sea temperature that impresses most. Its 25 degrees in the sea this week. At night it drops to 18 degrees. I see only a few Egyptians needing a jumper in the evening.
Anyhow I digress. Rental yield. If you buy the right property in the right development, the Net rental, after maintenance and fees, is highly likely to achieve 10%. 15% for the right property is realistic.
Why Palm Royale Resort?
Two major reasons…the Sea and the Design. Palme Royale is very close to Sea. At last, I found a front line resort that gives nearly every apartment owner a proper sea view. By designing the apartment blocks in a V shape it means every apartment gets a great view. There are no second line, second rate apartments just a few rear studios on each block.
North of Hurghada is flat as a pancake. Sea views are like gold dust.
Beach space is as hard to come by as a front line seat at your favourite show. You have to pay good money for it.
But I could mention why I was impressed with the builder, the international Swiss Hotel Chain for the on site hotel, the Spa, the Gardens. But I wont. Go to www.jet2letproperty.com for this.
Front line you no longer have to dream of. A pre launch 10% discount gives prices of €48,510 ($62,577 or £37,898 approx) for a 49m2 studio. That means the first investors, who want strong rental yields, will be best not leave enquiring long. Register at www.jet2letproperty.com for due diligence report and FAQ’s.
Palme Royale Resort is not just about its 5 star tag. Its about a private 340 metre private beach, sea view, design and rental. All this within ten minutes from the international airport.
What do you think of investing in Egypt? Is Hurghada the best place right now?
Your comments are welcome. If you found this useful please register for regular new posts to be sent straight to your inbox.
Hello, this is Lance Nelson and welcome to my blog, Overseas Property Talk - the authority on investing in overseas property.
These are such great tips. It’s a bit scary right now for so many people and it might not be obvious that this is an opportunity to find some great real estate deals!
Miss Gisele B.
Hello Gisele,
I think you’re right. It is scary.
But why are we now reading about the long time successful professional investors, be it in the stock market or property market, who are now making their investments? They know not to follow the herd mentality.
A unique set of circumstances in Egypt makes it my favourite country for investment. Historically cheap land with current investments reflecting this, very low build costs. An economy that is growing 7% and forecast 6% next year.
Its easy to forge that Egypt and Middle Eastern countries have little personal indebtedness. Property is bought for cash. Whilst this will change one day, investors can get in at prices that have so much more upside. As always there are risks - but good due diligence mitigates this risk.
With prices from €15,000 and with sound rental rental returns I expect that returns will be amongst the best for 08 and 09.
One final thought… when confidence returns just think the impact that will have on behaviour!
And even the pros recognise they don’t buy at the very cheapest time. But they buy when its good value.
Lance