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A Beachfront Investment for Less Than $50,000

Saturday, March 1, 2008

Read more about investing in real estate overseas in International Living Postcards—Saturday Edition

Shopping for a beachfront property investment with a budget of $50,000? Your options are limited, no question, but here’s one to look at right now: Egypt’s Red Sea coast.

The Egyptian government has set a goal to increase the volume of tourists to their country by 50% in the next five years. The Red Sea resorts will be the biggest and most direct beneficiaries of the efforts to this end.

Prices are low by any standard. One five-star development is selling pre-construction one-bedroom apartments for €29,500 (about $45,000). The units are 45 square meters, which means you’re paying $1,000 per square meter. The play here is both short-term rental return and capital appreciation. These units could be worth 25% to 50% more in 2010, when they’re scheduled for delivery.

The draw for tourists to this part of the world is the practically guaranteed sunshine and the low cost. Brits and other Western Europeans can get to Egypt via direct flights to Cairo, then connect to Hurghada or Marsa Alam on the Red Sea. Direct flights (charter and scheduled) are also available to these two coastal cities, mostly on low-cost European airlines. Expect more flights from these low-cost carriers as tourism increases.

As an added bonus for the would-be investor, Egypt imposes no capital gains tax. Rental income is taxed at 10%.

The obvious drawback for North American tourists is the distance. This is a downside for would-be investors, too. The cost of visiting to carry out your due diligence could be 10% of the eventual purchase price of any investment you decide to make.

Still…a beachfront apartment for less than $50,000? It’s hard to argue with that.

 

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