By the advent of the summer season, high prices of the North Coast villas have sparked a controversy on social media, as many Egyptians flocked to pay down payments of units exceeding EGP 100 million. Surprisingly, they became fully booked within a few hours. But the question is: why would people buy such overpriced units? Or, are they not overpriced to begin with?
“Who has that amount of money?” one social media commentator asked, while another said, “The North Coast’s gated communities obviously target only the rich, who are now apparently becoming a big segment [of society].”
The controversy led to the old debate of “the old Sahel vs. the new Sahel” or as others may call it “the good Sahel vs. the evil Sahel.” But if the old Sahel is retaining its prices, then why are people hoarding out of it?
At one of the compounds in the old Sahel, seaview villas are rented for around EGP 2,000 a night, while a regular chalet starts from EGP 900 to EGP 2,000 per night. On the other hand, the villas are sold for up to EGP 3 million, while the chalets are for only EGP 600,000.
“I would not want to upgrade my chalet from the so-called old Sahel as it brings back all the memories. I have been going there every summer since I was 4 years old; I grew up there and it feels like home,” Salma Tarek, a 28-year-old resident in that compound, told Arab Finance.
Meanwhile, Ahmed Abo El Wafa, a 61-year-old resident in a newer compound in Sidi Abd El Rahman, said that he rents his six-bedroom villa to Egyptian expats who spend EGP 250,000 for two weeks, or EGP 17,000 a night. “This is considered a small amount if it is compared to apartments or small chalets that are rented at an amount between EGP 8,000 to EGP 12,000 per day,” he said.
A chalet in one of the high-end compounds, on the other hand, which had originally sparked the controversy, could be rented for more than EGP 500,000 a month. Buying villas, however, ranges from EGP 20 million to EGP 118 million.
“Me and my friends were going to rent a villa in that compound last Eid, but when we knew the prices, we opted to take a trip to Lebanon instead,” a source who requested anonymity told Arab Finance.
Moreover, according to Booking.com, renting in one of the famous hotels in Al Alamein could reach more than EGP 1.1 million per six days.
A number of investment experts agree that real estate prices in some parts of the North Coast are extremely high and unjustified. Marketing expert Remah El Tohamy says, “Real estate prices doubled and reached unprecedented levels, for example, an apartment with an area of ??100 square meters in the new Alamein Towers was sold for more than EGP 3.5 million. Prices increased exaggeratedly, exceeding the financial capabilities of the middle class.”
El Tohamy further elaborates that hiked prices in the North Coast include everything else; from hotels, food, drinks, entertainment, and spots, as well as the prices of restaurants and cafes that are eager to make a full year profit in just three months.
It should be noted that an exaggerated increase in prices may negatively affect the future of upcoming summer seasons, El Tohamys adds, saying that the turnout rates could decline on the northern coast, as previously happened in Greece, Cyprus, and Spain.
“[This] offers the city of Marsa Matrouh the opportunity to appear on the investment map in the coming seasons [...] Marsa Matrouh has more beautiful beaches than the North Coast, and the cost of living suits the middle class,” he notes.
Real estate expert Khaled El Mahdy told Arab Finance that top real estate developers in cooperation with foreign consultants are selling the idea of a “community” and rather branding that community on luxurious ideals. It differs by everything from A-Z, from the experience to the top-notch services, thus, the target audience of this community is a very niche segment that includes foreign buyers as well as investors, the expert explained.
In conclusion, as the old Sahel still retains its identity along with its relatively cheap prices, the new one is built on the perception of a luxurious community, thus attracting only those with purchasing power against the face of an overpriced property. This division between the old and the new could usher in a new era of more demand on an entirely different city from Marsa Matrouh, Marsa Allam, and Soma Bay.