Foreign ownership of property, whether for individuals or for companies, is outlined in a number of pieces of legislation that have been passed in recent years, with a view to creating a more liberal environment for real estate investment. Perhaps the most significant law is that of Decree No. 548 that was passed in 2008. This ruling states that foreigners must treated in the same manner as Egyptians with respect to the units they own for the purpose of residency in certain tourism and new development areas. This includes areas such as Hurghada and land along the Red Sea, with the exception of Sharm El Sheikh and the Sinai Peninsula.
Registration of these units is crucial, and prompt notarisation is required. Regulation requires that notary public offices register real estate disposals within 10 days from the date of receiving the complete set of documents required for registration.
In terms of terminating the title, foreigners may dispose of their acquired units, whether through ownership or “usufruct rights” (leasehold agreements), right from the date of acquiring the right of ownership or usufruct.
The real estate market is a similarly open environment for corporate bodies. Under a 2007 decree, companies and entities have the right to own the land and property necessary for conducting their business or expand their activities, irrespective of the nationality of the partners or shareholders, their residency and the percentages of their partnerships and shareholdings. This rule is applied with the exception of land in strategic areas, such as those adjacent to the western, eastern and southern borders of Egypt, islands located in the Red Sea and Mediterranean seas and the Suez Canal area.
Although foreign companies and individual entities are generally prevented from owning any land or property in the Sinai Peninsula, including the popular tourist destination of Sharm El Sheikh, they do have the right to usufruct contracts for residency units up to a maximum period of 99 years. In order to obtain land or property in Sinai under the usufruct agreement, the following conditions must be met: the leasehold contract must be concluded with the entity owning the land for a determined period of time starting from one year up to 99 years; all buildings, facilities and premises constructed on the land granted by virtue of the usufruct right must be returned to the original owning entity at the end of the usufruct period. This contract may be renewed upon the agreement of the parties, and all necessary approvals must be obtained from the relevant authorities as well as the concerned governorate. Furthermore, any investment for development projects undertaken in the aforementioned restricted areas must be in the form of an Egyptian joint stock company in which Egyptians own at least 55% of the share capital at all times.
The barring of foreign ownership in the Sinai Peninsular is due to the area’s status as a border zone. As such, and pursuant to military orders, those who are not Egyptian-born citizens are prohibited from owning properties falling within the zones that are subject to the supervision of the borders authority. Decree No. 14, issued by the Supreme Council of the Armed Forces in 2012, further clarified this regulation, stating that the acquisition of land and real estate in the development areas of the Sinai are only permitted to natural citizens holding Egyptian nationality and corporations that are fully owned by Egyptians. Any ownership contract not abiding by this rule shall be deemed null and void.
This stipulation runs in both directions. If the ownership of lands and real estate in the Sinai Peninsula has been transferred to a non-Egyptian by inheritance, the inheritor in this case must dispose of the ownership of these land or real estate to Egyptians born to Egyptians parents within six months from the date of death, otherwise the land ownership will be transferred to the state based on a comparable price.
Read More from OBG
