Is Oasis Marina Beach Resort In Hurghada Like A Porsche?

Oasis Marina Resort reminds me of the day I got behind the wheel of a friends’ Porsche 911. A few minutes previously, on the look out for a replacement car I had been test driving a very worthy VW Golf.The difference of the Porsche 911 from the Golf was huge. A different league. Everything feels just so right in the  911. I felt more alive. I could feel the difference. And why my friend feels its worth the extra money fro the best.

Your Porsche costs three times the price. Not worth it? Yes but it is for some folks. And the same holds true for prime property, prestige locations and desirability.

So lets back down to earth and think property investment and not luxury toys.

But when I saw the Oasis Marina building site it was just like that special Porsche feeling.

But there is a difference

This is o Porsche location at VW prices. Clear uninterrupted views of the crystal clear Red Sea. The large protected beach in front your to wander over.

But, for me, this is not enough. Because its no use investing in property right now, unless its at a great low price and its really safe.

Developers can forget about attempting to come to market without full project funding and full plans. No Bank lending? Crunchie Credit times have stopped quite a lot of that.

And the irony is that Egypt has cash rich developers because so little debt was taken out.

We are seeing property here being sold at £12,800 ($19,000 14,000 Euros) because in the almost unique position for very little being paid for the land and exceptionally low labour costs. A good daily wage here is £5 for a site labourer. Now that raw material prices have come back down, then value property is still available. It just will not get cheaper because there’s no need. Developments in Hurghada, like Oasis Marina are selling. People who visit the Oasis site can see the scarcity of this premium location, the infrastructure and the safety of in built resilience to down turns elsewhere.

As property investors are waiting to see where property prices settle, in markets driven by speculation, and debt. So investor demand looks for sound alternatives. Egypt has a place in the property investor’s portfolio.

For those who just want some warmth and sunshine at VW prices, then I think this is one not to miss.

For more details on this Oasis Marina Beach Offer, contact Jet2Let Property Ltd:

http://www.jet2letproperty.com/eg/483-Oasis-Marina-Off-Plan-property-Hurghada-Red-Sea-Coastline.html

Tel: 044(0)113 3131000 or email: info@jet2letproperty.com

Why Palme Royale Resort Hurghada Impressed Me

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.

Property contract - am I bothered?

Today I heard about an off plan property investor in Egpyt who found out that they were not going to receive the free kitchen they thought they were entitled to. He realised after he had signed his purchase contract for the off plan property, that the free kitchen as per his agent’s web site, was not now included as part of the  in the apartment fixtures list in the contract.

The contract he had signed had no mention of such kitchen, and the buyer felt hoodwinked by the agent. I felt it time to get more bothered about what’s in off plan contracts.

Disclaimers

Ever seen disclaimers on web sites? You will note that most real estate agent web sites have a disclaimer page, or link. The property brochures will also have comments to indicate that images and the details are for illustration and indication only.

Pretty pictures of pyramids, golf courses, svelte sunbathers, infinity pools are all there to attract your attention. So do you think “Great, that’s all the info I need, where do I send my reservation monies for this dream Santiago island, Dubai IMPZ (delete as appropriate) luxury property?  The property web site implies its next to a pyramid / golf course”.

On the same theme, the CGI’s (Computer Generated Images) will show all sorts of unrealistic backgrounds and perspectives. Rely on them for accurate information, and you’ll be in for a surprise come viewing day.

We are all bombarded with information. Unless I see some colourful, inspiring and uplifting image, along with some snappy catch phrase, I might never look twice at the property offering. Disclaimers are there to say that this is all a guide or, rather more accurately, its all an advertisement. Let’s treat it like one then.

Contract Focus

So when buying an off plan property, anywhere in the world, the main focus is on the contract we sign. The natural reaction will be to pass this to a lawyer and, if he says OK, then it must be OK. This is where I see we need to change out way of thinking. Its basically wrong to always take your lawyer’s advice. We need to acquire the skills to manage your lawyer effectively.

The first task is to understand your lawyer’s perspective. Believe me, your lawyer does not read agent’s, or developer’s, information sheets. He, or she, is unlikely to print out brochures from your agent’s web site and check that all the fixtures, fittings and facilities that are part of the online specification are then placed in the sellers contract. Buyers must undertake a thorough check of what is included and what is no, and then advise the lawyer.

My mistake once was to assume that obvious things, like doors, like attachment of heating system and similar items, that would normally hardly be worthy of a contractual mention, would not necessarily appear in the contract. Best to accept that it probably will not be there at completion if its not specified.

I ask my lawyer to confirm that the translation from local language to, typically English, is accurate and for them to certify it is indeed correct. Important, because In case of dispute, its the local language which legally will prevail.

Kitchens

Kitchens seem to rank as the top area for dispute. So here are five tips when looking at kitchens in off plan contracts:

1/ What literally translates as a “kitchen box” is actually not a nice set of units (in Bulgarian translations) - but means an area to put your own kitchen in. Check and certify all translations.

2/ Local builders standard kitchens can be very nasty. There is often zero value to having them installed. Unless you are really sure, buy without kitchen so you can coordinate with furniture.

3/ Design your own kitchen to ensure some simple, but practical, touches. For example, add an eye level space for a microwave so it is away from work surface, design a refuse cupboard or even add a dishwasher for larger properties.

4/ Don’t think that if your overseas property is a load cheaper than a similar one in your home country, that the kitchen and furniture should be loads cheaper as well.

6/  Check your kitchen design with someone you know who has experience of such matters. If you are a stranger to cooking in your own kitchen be wary of your own design attempts. Find out what makes an attractive kitchen area.

5/  If you have no kitchen in your apartment as part of the contract, don’t fret too much if you are buying in a new emerging market. In the most part, that could even be good news. If you thought you were saving a load of money by having it included, you probably were not.

In emerging markets, such as Egypt, Bulgaria, Cape Verde, Turkey, Romania etc, its common not to have kitchens included. Why is this? Historically the only previous sales will have been to local buyers. Builders would have, in the past, built mainly for locals and locals often buy unfinished apartments. They want to get the home the way they like it. Its also the low cost option. Typically, labour is cheap in emerging markets and local buyers know that they can supervise the work and get exactly what they want.

Moving on from whats included, to other brochure talk such as “private beach access” and “free use of spa”. assume nothing will be free unless its documented in the contract. Indeed, free facilities may not be so good as, if its a pure investment property, you may prefer your tenants to carry the costs of the facilities.

When can I view the purchase contract?

Generally, buyers receive the purchase contract, (sometimes referred to as the buyers agreement or preliminary agreement) after paying the reservation fee. Buyers then start their property due diligence immediately after this, including receiving the agents contract.

I have to say that I do not like this practice, so I am negotiating with our developers to produce contracts for common availability and full disclosure of such contracts before payment of my clients’ reservation fees.

I will often be able to provide the contract before you have to make any purchasing decisions - just ask me. As more developers fall into line my hope is that more buyers in general will be able to assess upfront what they are getting.

My final point is that in some markets, like Egypt, a long contractual negotiation is unlikely. The culture can be quite different to what we are used to. It’s often a case of “take it, or leave it”.

A developer may not want to have many different purchase contracts to manage - so if you are buying in a popular project in an emerging country, with brisk sales then trying to extend the negotiation period may mean you lose your reservation.  All this needs to go in the mix of information for assessing the risk of commencing your investment.

Careful due diligence is clearly vitally important. Do please remember to register to download my free due diligence guide on home page to start equipping yourself as a savvy investor. Read this, and you will have many of the skills required to make a knowledgeable overseas property investor. Agents may well be helpful but, if you remember that they are introducing you as buyer to a seller, and its the seller’s contract you sign, then this may remind you to always put marketing material in perspective.

In my capacity as a real estate agent, I have acted in good faith by passing on the information provided by a developer in response to questions from buyers. It has happened that these answers are found not to be supported by the contract wording. This eventuality is annoying for agents and investors alike and provides more evidence, if required, that we need to be very bothered about that contract.

Finally in these money saving times, a reader asked why there were such large price differentials when comparing several properties? Remember the saying “you often get what you pay for”. Raw material costs have risen sharply, and even doubled in some cases. A full blog response on this will be posted soon.

However in some countries, where material supply is dominated by just a few companies, then this will be particularly true. What will these cost increases mean to the final property construction? Its commonly known that its the finishing of a property that costs much money, and it is here where corners may be cut the easiest. Sub standard quality, could mean facing up to a reduction in rental occupancy and speed of resale in future years.

Please comment on this blog article, and do please share your property buying experience to enhance the resources here for overseas property investors.

Zina Heights, Hurghada

Zina Heights Review

I have been often reticent when recommending some Hurghada properties, as I have uncovered due diligence issues or do not get answers to simple questions. Sometimes however, its just that the uncertain rental prospects concern me. This may be ok in some places but here in Egypt - let’s face it, there is plenty of desert to build on.

Zina Heights Deluxe Resort development falls into the category of minimal ownership hassle. With a hotel like design and facilities in a central location, in new Hurghada, Zina Heights has the added bonus that work has already commenced BEFORE launch.

With the market volatility and general economic concerns, the main focus of investors right now should be on the reduction of investment risk. Its what I’m searching for all the time for my clients and this is one opportunity that will set a standard in the area for others to follow. So I know Zina Heights has already started construction, what else makes this one to consider?

Rental Guarantee

Investing in Hurghada usually means no rental guarantees. However with Zina Heights there is a three year rental guarantee scheme in place of 6%, 7% and 8% each year, and an excellent payment plan spread out over two years. Zina Heights is positioning itself as one of Hurghada’s most prestigious tourist and business hotels

Egypt in general

I used to think of Egypt as being all about Pyramids and the Nile and all the other ancient history wonders it is home to. However, its now also gaining an excellent reputation for the value for money resorts and hotels located along the turquoise waters of the Red Sea coast.  The fantastic climate that exists there all year round means that you get guaranteed sunshine.

With unspoilt coastlines, coral reefs, year round sunshine, and golf courses nearby, it is the fastest growing tourist destination in Egypt. Hotels in Hurghada are already reporting 85%-90% occupancy all year.

I recommend everyone who is not sure to take a trip there, I’ll be glad to put a relaxed property viewing schedule together for you.

Facilities

This luxury hotel development is located within walking distance of the town centre of Hurghada and a few minutes from the beautiful white sandy beaches in Hurghada. The  master suites are located within a Deluxe Hotel resort and these residential apartments have the benefit of a range of generous and exclusive hotel services and guest amenities located on the ground floor, to include a range of fine dining restaurants, spa, boutiques, bars and concierge services.

Prices

Pre launch prices for Zina Heights start at €39,900 for a pool view up to €50,000 for seaview apartments, there is a wide choice of apartments available for the 330 total.

Tourism

Tourism is becoming Egypt’s most lucrative industry and according to the U.N tourism organization, tourism in the country increased by 20% during 2007, which is excellent news for the buy-to-let/tourism rental market.

The government in Egypt is doing a lot to encourage international companies and individuals to take advantage of the new tax laws to purchase properties there. Buying property in Egypt is quite simple with relatively low purchase costs and most importantly for investors there is no capital gains or inheritance tax.

Flights

Flights are readily available from all major European destinations, and with new initiatives, including low budget airlines like EasyJet commencing flights to Hurghada it is expected that tourism figures to Egypt will reach 14 million people by 2010.The collapse of XL airways is a temporary blip in capacity which will be soaked up by Thomson airline and others.

Summary

Yes, this review is more positive than other new offerings in the region, but also because I believe Zina Heights to be a better rental proposition than most others in the area.

Zina Heights goes further than most to lower the investment risk. In my view, this is achieved because of the experience of the developer in building and managing other hotels, the quality of materials used, the integral boutique hotel, facilities and the offering a three year rental guarantee. These are my views,  but please can you comment to let me know what you think.

Oh and finally… its called Zina Heights because Mr Adley’s daughter is called Zina, so now you know.

If you are interested in finding out more about Zina Heights or investing in property in Egypt be in Cairo, Sharm Al Sheik or Hurghada, do email me on lance@overseaspropertytalk.com or call +44(0)113 3131000.

Property in Hurghada

More House Price Falls

Well I have to say that my last comment about the US economy was over optimistic. Fannie and Freddie will not be enough to see the return of optimism. With Lehman Brothers gone I think we can be sure of another Bank ceasing to trade. There will be bank mergers as well and a fair bet that many of the investment Banks will end up being owned by the proper Banks - following JP Morgan Chase lead with JP Morgan merging with Chase Manhattan.

However, not so widely reported was the 10% fall in oil yesterday, its now under $100 (approx $93) and looks set to go much lower, laws of supply and demand are working.

Oil will be the catalyst for recovery

I see this oil price slide as the start of a long process of recovery. More falls will temper inflationary pressures, stimulate demand and, combined with interest rate reductions, set the US and the rest of us for recovery. My main fear is the housing market in both UK and US. Demand for houses has yet to start up again and further house price falls are most likely. Negative equity is going to be an issue, its possible there will be a million homes in UK in negative equity. This means that bankruptcies will sharply increase and further test their liquidity. Its going to be tough times

What about overseas property?

There is no doubt that overseas property demand is linked to the economy. However, in the same way people are downgrading from branded to won label goods so I am seeing people search for low prices outside traditional markets.

The reason is simply to do with price. Why pay 500,000 euros in Spain for sea view when the same thing can be had for under 80,000 euros in Hurghada Egypt? The difference is that large.  When investors think that there is no “off season” for rentals in Egypt then they start to understand that this cheap option is one which has more than just price upside.

So house prices in certain overseas markets are attractive and I predict that more people will be making the effort to search them out. Its really the same process as paying a thrird of the price for own brand beans or tomatoes. You get pretty much the same thing and save a whole load of cash.

12 Reasons - Why Hurghada?

1/ Strong economic growth in Egypt - 5.9% forecast for 2008

2/ Infrastructure good but with more investment from the government improving

3/ Lots of facilities, diving, snorkeling, windsurfing, kitesurfing, historical and cultural attractions

4/ No capital gains tax

5/ No inheritance tax of British residents

6/ Improved purchase process

7/ Warm climate with virtually no rain. Year-round tourist season

8/ Many airlines fly into Egypt and Hurghada from many countries

8/ Low cost destination and low cost of living

9/ 9.8 million Visitors to Egypt in 2007, forecast to double to 16 million visitors by 2014

10/The property market in Egypt is developing fast - low prices capital appreciation are likely

11/ 35Km of sandy beaches

12/ Developments in great locations with 5 star facilities.

Before investing anywhere overseas, be sure to register for free Guide to Due Diligence.

Khamsin Beach Hurghada

Khamsin Beach, Hurghada is a brand new pre launch beach front line development in Hurghada.

With beach front a scarce and expensive resource I believe that Khamsin Beach represents excellent value for money with prices ranging from £469 per m2 to £825 per m2.

In pre launch phase many units in this pre launch come with free air conditioning and free furniture.

Direct sea views from £719 per m2 up to £825 per m2 which is excellent value for the Hurghada front line location.

Pre Launch One bedroom 55m2 NET area and 60.5m2 GROSS gives pre launch price of £26,023 (£430.13 perm2). This include free air conditioning and furniture - a discount worth between 10% to 15%.

Under market value for the area with direct sea views from £719 per m2 up to £825 per m2 for Hurghada front line location.

£500 reservation. Refundable up until 21 days after receipt of contract.

Escrow account established for buyers.

First payment 40% (less reservation fee).

Project completes May 2011.