Since the start of the summer, Egyptians have been bombarded with ads about dream homes in vacation areas, especially the North Coast, or Al-Sahel, as many people call it, where the weather is cooler, the sandy white beaches are more extensive, and the water is various shades of blue. Distracting billboards on highways entertain drivers stuck in traffic and tickle their imaginations with ideas of the ideal vacation. The areas being advertised are located around 150 km west of Alexandria overlooking the Mediterranean Sea, and they are widely seen as the new hip spots to be this summer. Some of the ads for one of the top destinations in the area invite vacationers to get stylish and get in shape if they want to spend their holidays there. These are fashionable destinations where late-night parties take place. If you are among those holidaying in these areas, it means you come from the top strata of society. But holidays at this destination do not come cheap. High-end units cost between LE15,000 and LE25,000 per m2. There is nothing available for less than LE1 million, and yet the apartments and villas are being snapped up like hot cakes. The strong demand comes from the fact that many people are buying property to protect the value of their money, said Youssef Khalil, managing director of Integrated Real Estate Services, an estate agent. Over the past five years, the Egyptian pound has lost almost 50 per cent of its value, going from around LE6 per dollar in 2011 to around LE12 on the black market today. This has made more and more people keen to put their money into real estate, and according to Khalil many are buying holiday units under construction according to an instalment scheme that involves paying a lump sum of around 25 per cent upfront and the rest in monthly instalments. “Buyers are counting on the fact that with time and inflation, the real value of the instalments will diminish,” he said. While the existing prices are already extravagant, Khalil believes that the next six months will see further hikes. Developers will have to factor in the depreciation of the pound and change their prices accordingly, he said. Egypt is expected to allow its currency to float freely as part of negotiations with the International Monetary Fund, and this could mean further depreciation of the pound. According to Khalil, most of the deals now being made are those involving instalments, and anyone wishing to sell their unit for cash is likely to have a hard time. “For every 10 units sold through instalments, only one is sold for cash,” he said, explaining that clients did not want to put down large sums even it if meant getting cheaper units. This could mean trouble down the road, he warned, since when home owners have finished paying their instalments and may wish to sell their homes they may find that the value of the property has become so high, especially with the further depreciation of the pound, that they will not be able to sell it easily. “There could be an oversupply of highly priced units,” Khalil said. The shift towards this area of the North Coast close to Marsa Matrouh on the border with Libya has been happening over the past five years, Khalil said. “The beaches are more beautiful, and the sea is calmer,” he said. In the past, the part of the North Coast close to Alexandria was the place to be in summer. Today, cheaper vacation spots are more easily accessible there because of the move towards Marsa Matrouh. Customers can acquire a large unit in the older area for the price of a small one in the new. But the units are not sold so easily, because they require payment in cash. Rents start at LE2,500 and go up to LE5,000 per night with a minimum stay of one week required in the new areas as against LE800 per night in the old ones. Khalil said the development of the North Coast had been mostly residential and was used for at most three months per year. Only a small number of buyers from the Gulf invest in the area, and there is no foreign investment. The area could have been developed to be a tourist attraction all year round, Khalil said, adding that the current pattern of gated residential communities overlooking the Sea has deprived others from enjoying the beaches. “This has been beneficial to developers, but not to the government,” he said. Khalil said it might have been preferable to model the area on coasts in other Mediterranean countries, where beaches are not enclosed except for those belonging to hotels. Most are open to all, and private residential areas are kept set back on the other side of a road. He said that more hotel investment was needed in the area, as at present there are only five hotels in an area that extends over some 300 km. Omar Eltahry, Senior Consultant with Colliers International MENA a global real estate services company agrees. For the area to achieve an international touristic destination status, he told Al-Ahram Weekly, a road map must be in place to ensure core tourism facilities are in place and capable of hosting and preserving its visitors. Such facilities could include a “souk-like retail development towards the southern fringe of Marsa Matrouh road, organised desert excursions and wide facilities of water sports which may stretch the destination's peak seasons,” he suggested. In addition to this, Eltahry said, the government will be required to make hotel investment in the area more appealing by providing prime land plots to potential investors on a long term lease structure. “It is not too late. What is left of the coast could still be developed differently,” Khalil of IRS concluded.
