Experts: Return on properties in the North Coast records 25% investment.

Real estate ROI (Return on Investment) is a vital tool for investors seeking to measure the profitability of their property ventures. It captures financial rewards generated from an investment, allowing individuals to gauge how effectively their money is working for them.

By factoring in elements like rental income, property appreciation, and associated costs, ROI offers a clear snapshot of potential gains. A strong ROI not only reflects a wise investment choice but also empowers investors to make informed decisions, ensuring their real estate journeys are both rewarding and successful.

• Insights on Real Estate Returns in Egypt

CEO and Founder of ETQAN Business Development Basem Elsherbiny stated that the ROI in real estate in Egypt varies depending on the type of property, whether commercial, administrative, residential, or coastal.

He explained that the annual return on properties in Egypt ranges between 10-15%, compared to stable countries like England or Dubai, which achieve increases between 5% and 8%.

Elsherbiny noted that Egypt is one of the largest real estate markets in the Middle East, with about 15 million Egyptians living abroad, accounting for approximately 35-50% of real estate sales in the local market.

On the other hand, Chairman of A-Squared Consulting Ashraf Diaa believed that property values in Egypt increase between 15-20%, in addition to considering the Internal Rate of Return (IRR), which is the rate at which each pound invested is expected to grow over the investment period. He mentioned that rental yields range from 10-14%, while residential returns are between 7-9%.

Diaa added that the rental yield for commercial properties ranges from 10% to 14%, while residential properties yield between 7% and 9%. Nevertheless, he anticipates an increase in rental returns for residential properties due to the influx of Sudanese refugees in Egypt purchasing residential assets, along with a surge in unit deliveries and the launch of numerous new projects, particularly in new cities.

Elsherbiny pointed out that commercial properties generate the highest return on investment, followed by coastal properties, which have seen significant increases, then administrative properties, and finally residential properties.

In turn, Hatem Adel, CEO of RoadMap Consulting, stated that the return on investment in commercial real estate reaches 12%, particularly in new cities. He emphasized that Sheikh Zayed offers a higher return on investment for commercial projects compared to East Cairo or the Fifth Settlement.

Elsherbiny disclosed that economic stability, the liberalization of the exchange rate, and the stability of the dollar have contributed to stimulating the real estate market, making investment in property more sustainable. He noted that the market has begun to recover since last May, predicting that it will reach its peak in the last three months of the year. Sales in the sector reached EGP 800bn by the end of July and are expected to reach EGP 1tr by the end of 2024.

• ROI Growth

Elsherbiny explained that the growth of returns on real estate investment depends on several factors, the most important of which are location, the developer’s reputation, and the project’s name, along with its operational status, particularly in non-residential projects.

He also noted that scarcity plays a significant role in increasing returns; the more limited the supply, the higher the return.

Meanwhile, Adel added that the financial returns generated from real estate investment rely on various factors, including annual rents and the appreciation of property value over time, as well as additional expenses related to the property, such as maintenance and repairs.

He explained that this return is calculated using a formula that subtracts annual costs from annual returns and then divides the result by the property’s market value, providing an accurate picture of the expected profitability from real estate investment.

• Real Estate: The Ultimate Investment

Diaa explained that the ROI in real estate surpasses that of gold and the dollar, as real estate revenues come from multiple sources, such as recurring rent, while revenues from gold and the dollar primarily rely on sales. This makes real estate more stable and less susceptible to fluctuations.

He pointed out that property values do not decrease, unlike gold and the dollar, which can experience price volatility.

He added that the return on ownership increases even if the client pays only 30% of the unit’s value and begins renting it out after receipt. In this case, they can cover part of the installments from the rental income, while the remainder becomes continuous profit, further enhancing real estate’s superiority as an investment option.

He concluded that returns in real estate can take the form of investment returns, ownership returns, or asset returns, offering a level of diversification not found in other investment vehicles.