With growing infrastructure, modern development projects, and a rich cultural heritage, Egypt is fast becoming a focal point for Gulf investors seeking both lifestyle benefits and promising returns. For many GCC investors, Egypt offers a unique blend of lifestyle and investment opportunities. The country’s rich cultural heritage, coupled with its modern amenities, makes it an attractive destination for those seeking holiday homes.
Lifestyle and investment appeal
Locations like the North Coast are favored by Saudis and Qataris, who are drawn to its potential as a prime location for holiday homes.
Elsewhere, Sharm El Sheikh is popular among Omanis and Bahrainis, who are drawn here by the area’s scenic beauty and recreational facilities.
Overall, GCC investors continue to show a distinct preference for Greater Cairo, including New Cairo, Downtown Cairo, Sheikh Zayed City, and the New Administrative Capital. These areas are favored by 73 percent of GCC investors due to their modern infrastructure and promising development projects, according to our recently published Destination Egypt 2023 report.
Our research has also shown a notable trend among GCC investors: a robust interest in Egypt’s second homes market. With 94 percent of wealthy GCC investors expressing a desire to invest in Egypt, and 72 percent specifically looking at second homes or holiday properties, the allure of Egypt’s real estate market is clear.
Alamein gains traction
Egypt has positioned tourism and hospitality as one of the key pillars, aiming to attract over 30 million tourists and to increase the sector’s revenues to over $30 billion annually by the end of this decade.
The government is placing extra emphasis on Alamein City, one of Egypt’s planned 4th generation cities, designed with advanced urban planning and smart infrastructure, as a way to complement existing tourist hot-spots like Sharm El Sheikh and Hurghada, which is contributing to rising demand from GCC holiday home buyers and visitors.
Alamein City is designed to be a modern, smart city that blends historical significance with futuristic urban planning, making it a key part of Egypt’s vision for economic growth and sustainable urbanization. Its coastal location, luxury real estate, tourism potential, and infrastructure make it stand out among Egypt’s new developments. Alamein City’s masterplan includes a mix of residential units, including high-end villas and apartments, as well as affordable housing to accommodate different income levels.
These long-term development goals are a strong signal from the authority to help reposition what is fast emerging as one of Egypt’s new tourism jewels as an all-year-round destination that is self-sustaining.
Unlike many coastal destinations in Egypt, which are more seasonal, Alamein City is being developed as a year-round tourist destination, featuring resorts, hotels, entertainment venues, and recreational activities for tourists throughout the year.
Economic and political stability
Egypt’s political stability and economic policies have created a conducive environment for real estate investments. The sector’s contribution to GDP, alongside the booming construction industry, has helped to shore up the country’s economic health. The government’s focus on infrastructure and development projects has further boosted investor confidence, making Egypt a preferred destination for GCC investors.
Egypt’s real estate sector, which accounts for 16 percent of GDP, stands as a cornerstone of its economy, second only to oil and gas. The country’s ability to attract substantial investments from GCC nations underscores the confidence and strategic importance placed on its real estate market.
For instance, in 2022, Egypt secured a $10 billion port investment from the UAE and a $15 billion investment from Saudi Arabia’s Public Investment Fund. Indeed, between 2021 and 2023, investments totalling over $115 billion were deployed across Egypt by the GCC states, with the UAE accounting for the lion’s share of this figure.
Such investments are not only a testament to Egypt’s economic stability but also highlight the deep-rooted economic ties between Egypt and the GCC countries.
A perfect second-home destination?
Egypt’s real estate market has become an increasingly attractive option for GCC investors, with 72 percent of them citing the purchase of a second or holiday home as their primary motive. The North Coast, in particular, is drawing significant attention, especially from UAE, Saudi, and Qatari nationals, with 40 percent showing interest in the area. Notably, 44 percent of Saudi nationals are looking to make their next property purchase a beach house in Egypt, highlighting the growing allure of Egypt’s coastal retreats for luxury and leisure.
Rental yields and market potential
The buy-to-let market is also a significant draw for GCC investors. As many as 35 percent of GCC investors plan to rent out their properties when not in use, highlighting the potential for rental income. The expected rental yields vary, with optimistic projections from Qataris and Bahrainis (6-8 percent) and more conservative estimates from Omanis (2-4 percent). Current single-let residential yields range from 5-6 percent in Cairo, and 6-8 percent in the North Coast.
While 68 percent of GCC nationals are interested in purchasing homes, either as primary residences or second homes, a significant proportion are also focused on buy-to-let investments. The allure of Egypt’s real estate market lies in its affordability and the potential for high rental yields.
Challenges and market dynamics
While the interest is high, the market does face challenges, particularly in the supply of luxury homes. The demand for high-end properties outstrips supply, creating a gap that developers need to address. Additionally, the fluctuating economic conditions and global market trends can impact investment decisions. However, the overall sentiment remains positive, driven by Egypt’s strategic location and growing real estate market.
Future outlook
Looking ahead, the Egyptian real estate market is poised for continued growth, driven by both local and international investments. The strong interest from GCC investors is likely to spur further developments in the residential and holiday home sectors. As developers and policymakers work to address the supply-demand gap, the market is expected to evolve, offering more opportunities for investors.
Conclusion
The GCC investors’ interest in Egypt’s second homes market underscores the country’s appeal as a prime real estate destination. The combination of lifestyle benefits, potential for high rental yields, affordability, and strong strategic ties to the GCC makes Egypt an attractive option for those looking to invest in second homes. As the market continues to develop, it is set to become an even more significant player in the regional real estate landscape.
About the authors
Zeinab Adel, partner and head of Knight Frank’s Egypt office, has provided advisory and consultancy services to over 30 local and international clients. Throughout her journey, she has held senior positions in treasury, investment, banking, and strategic consultancy, contributing to the evaluation and execution of high-profile transactions.
Aliaa Elesaaki is research manager for Knight Frank MENA, and brings eight years of expertise in real estate consultancy, specializing in advising startup developers, first-time investors, and established developers on market entry and expansion strategies. At Knight Frank, she delivers key market intelligence that shapes the strategic direction of clients in Egypt and UAE.
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