The Credit Crunch & Egypt

[danny]

Originally Posted by HORIZON

However, Egypt at all does not depend on imports, as the economy is supplying itself with practically everything it needs.

Egypt relies heavily on imports, there is very little manufacturing industry in this country at all, you only have to go into the local souvenir shops and lift up an alabaster pyramid to find the well known phrase "Made in China".

[Organics1]

I really can't see how Egypt or any other country's property industry will be able to ride this storm unaffected.

In responce to one of the posts which said that "most people are buying cash", I'm not sure that's quite accurate. From my research what a lot of people are doing is pay the first or second installments in cash but were going to either get a mortgage, re-mortgage or get a loan for the completion. With the current state of the banking industry and UK economy there will be a lot of people who are worried about making that final commitment and hence the term "distressed sale" came into place. This happened a lot in the Dubai market which I was involved in quite heavily and people were selling their properties near completion for the original price they paid years prior. Also don't forget the "flipper". There are thousands of investors who never had any interest on completing the transaction and are banking on turning the property for a profit pre completion. Un-like the hight of the Dubai market where investors were making up to 200% profit on their investment, I think there are a lot of investors who are already starting to think about how they're going to pay the completion monies as they are struggling to flip on the contract.

In responce to the post about Egypt "concentrating on the Russian Market" there is one quite simple factor behind this "cash, cash, cash". When the anti money laundering laws came into effect in the UK there was a VERY SHARP drop in Russian investments. Just ask any London estate agent or even more any Major London auction house in both the antique and property market who will 100% agree. I guess Egypt turns a blind eye to where the money comes from as long as it's economy continues to grow. I off course am not tarnishing every Russian with the same brush but it's quite interesting that they "concentrating" on that market.

Egypt has just grown way, way to quickly and I agree with one of the posts which says it would be good to see some of these developers finish what they've started before starting on their next project.

[Lsab]

Interesting post Organics. Thank you.

[HORIZON]

Originally Posted by danny

Egypt relies heavily on imports, there is very little manufacturing industry in this country at all, you only have to go into the local souvenir shops and lift up an alabaster pyramid to find the well known phrase "Made in China".

I really do not think you can say much about Egypt's manufacturing by visiting souvenir shops, as well as you cannot tell about Egypt from visiting Hurghada or Sharm El Sheikh only.

[HORIZON]

Originally Posted by Organics1

I really can't see how Egypt or any other country's property industry will be able to ride this storm unaffected.

In responce to one of the posts which said that "most people are buying cash", I'm not sure that's quite accurate. From my research what a lot of people are doing is pay the first or second installments in cash but were going to either get a mortgage, re-mortgage or get a loan for the completion. With the current state of the banking industry and UK economy there will be a lot of people who are worried about making that final commitment and hence the term "distressed sale" came into place. This happened a lot in the Dubai market which I was involved in quite heavily and people were selling their properties near completion for the original price they paid years prior. Also don't forget the "flipper". There are thousands of investors who never had any interest on completing the transaction and are banking on turning the property for a profit pre completion. Un-like the hight of the Dubai market where investors were making up to 200% profit on their investment, I think there are a lot of investors who are already starting to think about how they're going to pay the completion monies as they are struggling to flip on the contract.

In responce to the post about Egypt "concentrating on the Russian Market" there is one quite simple factor behind this "cash, cash, cash". When the anti money laundering laws came into effect in the UK there was a VERY SHARP drop in Russian investments. Just ask any London estate agent or even more any Major London auction house in both the antique and property market who will 100% agree. I guess Egypt turns a blind eye to where the money comes from as long as it's economy continues to grow. I off course am not tarnishing every Russian with the same brush but it's quite interesting that they "concentrating" on that market.

Egypt has just grown way, way to quickly and I agree with one of the posts which says it would be good to see some of these developers finish what they've started before starting on their next project.

Regarding blind eye It is not so easy for Russians to transfer the money to Egypt even for the first contractul deposit anymore. Of course they can go around the corners, but they are already asking for papers (invoices, contracts) from developers which would ease up the transfer of money form major banks in Russia..

[danny]

Originally Posted by HORIZON

I really do not think you can say much about Egypt's manufacturing by visiting souvenir shops, as well as you cannot tell about Egypt from visiting Hurghada or Sharm El Sheikh only.

Maybe you should read Iains response which goes a little deeper than mine.

[HORIZON]

Originally Posted by danny

Maybe you should read Iains response which goes a little deeper than mine.

Let us not guess and go through the links below for the newest reports for Egypt: import/GDP ratio suggested to be about 20% lately.

http://www.mof.gov.eg/English/Egypt%...ber%202008.pdf

Ministry of Finance Portal - Reports and Indicators - The Financial Monthly - September 2008

http://www.mof.gov.eg/English/Report.../Sep08/t45.pdf

[HORIZON]

Regarding belfast-connection's post on banks' stability and protection/supervision, I guess a portal of Central Bank of Egypt will be useful Central Bank of Egypt.

[iain]

Interesting reports Violeta. My point still remains valid though - imports exceed exports which was the point I was making and Egypt very much relies on imports.

Critically the income from the "External" sources, Suez canal dues, overseas workers, Oil+Gas and tourism cannot be influenced greatly by Egypt in the face of possible (probable) World turndown.

Also if you look into the figures, Egypt have a high cost in food subsidies and the 30% increase in salary to public sector workers. These are being recouped by extra taxes on energy, cars, and so on. As the population increases further this will be real difficulty.

Having said that I think Egypt has come a long way and been very skillful in bringing their economy forward. It will be a balancing act to keep that progress.

As to the strength of the banks, if the banks in a country such as Iceland (formerly with a high MOODY rating) can effectively go bust then we all had better take care - Egypt was downgraded by MOODY earlier this year I think, citing the various problems unique to Egypt (subsidies etc).

Anyway if the great and good of our Countries can sort out this banking mess and restore some confidence then we can hope that this discussion is purely acedemic.

Bye the way - presumably there are plenty of Russians who can transfer money legally - I'm sure it's not only in cash! ?

Iain

[dave99]

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If you make a simple assumption that the "value" of a country is at least partly found in the strength of it's currency then you would have to conclude that Egypt is far more "safe" or "stable" than the UK since the UK currency has fallen against the the Egyptian pound by over 10% in the last 6 months.
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Which put simply means that money in property in Egypt is a better place to be than in the UK.

Hopefully the UK currency will recover some of the fall in the near future but it does mean that developments priced in Sterling are better value than those priced in other currencies whilst there is this difference.
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