Sunday, October 21, 2007

Hurghada Property & Red Sea Real Estate


I have been a bit quiet over the past two weeks on this blog and wanted to give you a sneak peak as to why this has been the case.

Propertastic! has been very bullish about the opportunities presented by investing in Hurghada property and Red Sea Riviera real estate and so decided to take a trip out to the area to see what is actually happening on the ground as there is only so much one can learn from online research. We visited Hurghada from 9 – 18 October, during which time we spoke to a wide variety of people involved in the property business – developers, real estate agents, lawyers, builders, etc. to get opinions of the current state and the future of the market there.

I am still working on the full report where I will go through each of the districts in the Greater Hurghada area and describe the developments and opportunities in each in detail but, as a taster of what is to come, here is the introduction to the report showing my initial impressions of the place:

Initial Impressions

The first surprise that we discovered is actually how incredibly close to the centre of Hurghada the airport is. OK, so I had seen a map and knew that it was not that far away, but it still came as a surprise to me when we were in our mid-town hotel in under 10 minutes after leaving the airport. This came as a nice surprise compared to our last trip overseas, to Alanya in Turkey, where we had to endure a two hour coach journey each way from the airport to the city and back.

No sooner had we left the airport when we saw the state of the construction boom. I expected there to be a fair amount of construction going on, but not that much. In a previous blog entry, I predicted that Hurghada would, sooner or later, turn into another Dubai with construction everywhere you look. Little did I know when I wrote that a month ago, but my prediction had already come true before I even said it. The differences between Dubai and Hurghada though are:

(a) There are no high-rise buildings in Hurghada. The maximum height of any building is five-stories.
(b) As much as property prices have increased since the start of 2007, they are still a lot cheaper than in Dubai.

Still, on the short journey from the airport to the hotel, every 100 metres we seemed to pass the concrete carcass of another new development, or a large hole in the ground awaiting the laying of foundations.

I expected Hurghada to be a lot bigger than it really is. The current population is around 40-50,000 making it half the size of Alanya in Turkey. One of the sales agents joked that Hurghada is a city that is 30km wide by 500m deep. Although this is a little of an exaggeration beacuse it is deeper in the older parts of the town, it’s actually not far from the truth – the newer parts of the city are probably only 200m deep.

I actually found it quite amusing seeing some of the marketing hype for some developments proudly claiming that the development is ‘only’ 700m from the sea. This basically means that it is on the complete opposite edge of the town in most instances – the airport isn’t much further than 1500m from the sea after all.

Another big surprise was that, even though you are only ever a few hundred metres from the sea in most instances, no matter where in Hurghada you are, it’s very difficult to access it. In Hurghada, it seems as if the sea is a very jealously guarded resource, even though there’s 30km of it available.

Pretty much everywhere I have been in Europe, beaches are seen as something that are public property, free for the use of everyone, or available for a token fee if you want to hire a sun-lounger. Then behind the beach is a promenade and/or a road, with the hotels or apartment buildings on the other side of the road.

This is not the case with Hurghada though – the beaches are actually owned by the hotels or the apartment developments and there is no way that you can take a long stroll down the beach as you have to stop when you get to the next hotel or development’s piece of territory. An example of how jealously some places guard their piece of beach can be found at the Seagull Hotel – one of the earliest and most famous hotels which is right in the heart of the main tourist drag in Sekalla. We went in to ask if we could have a drink at the bar. We were told that, if we wanted a drink, then we could sit in reception and they would bring us some. Come on! I fully expected us to pay way over the odds for a drink on the beach, but what did they expect us to do with their seaview? Steal it from them?!

While this is annoying for the standard tourist, it is a very important and useful factor for prospective property buyer to bear in mind because it means that property with direct access to the beach is always going to be at a premium in Hurghada. Logic says that the town is going to grow deeper and deeper over time as developers search for new land to build on, but spare beachfront land within the current region on Hurghada is already very limited, so is always going to fetch a premium.

Some more general observations about Hurghada …

I was very impressed with the weather during the time we were there. Being a pasty-white Brit, I have a problem if the weather gets too ridiculously hot. While we were in Alanya in late July, daytime temperatures were usually around 40C and I spent the whole time sweating like the illegitimate lovechild of Elvis and Barry White and had to take great care not to stay out in it too long for fear of getting burned to a crisp. In Hurghada, however, day-time temperatures while we were there always hovered around 30C. This was fine both for me and for my sun-loving girlfriend as it was plenty hot enough for her to top up her tan.

In the evening, I feared that it would get a bit too chilly as this is often a problem in the desert (as I discovered on a trip to Dubai in January where I was freezing cold soon after the sun went down). Night time temperatures were always around 20C or just under, which was perfect for wandering around dressed normally.

Some friends of mine who visited Hurghada a while back had complained that they didn’t like the place as it was dirty and downmarket and so this is what I expected to see. In parts of the town (Dahar and Sekalla) this was certainly the case. But it seems as if Hurghada has learned from their past mistakes as the newer parts of the town were very nice and clean – much more pleasant than I expected and better than anything I had seen in my other trips to the emerging Mediterranean (Alanya, Turkey and also on a previous trip to Tunisia a few years back).

Another thing I feared is that the local Egyptians would prove to be a complete pain in the neck, constantly harassing you as you pass by to buy whatever piece of tourist tat they offered in their shops. While there were plenty of salesmen who come bounding up to you with the standard ‘Hi! Where are you from?’ opener, they were a lot less persistent than their Turkish and Tunisian counterparts.

I was impressed with the range of activities that are available in Hurghada as there is a wide range of activities available for everyone. The water sports – the diving, snorkeling, kite-surfing, etc., which is what made the Red Sea famous in the first place, are obviously there in abundance. The beaches are a lot less crowded than I expected them to be, even the public beaches. This made a nice change from Alanya where it was difficult to find a spot on the beach where you weren’t always just a few inches away from the person lying next to you.

Families are catered for with a couple of waterparks, bowling and activity centres just for the kids. I was actually surprised at how few children I saw during my time in the town, but perhaps families prefer to simply stay in their resorts instead of getting out and about a lot exploring.

Late teens and twenty-somethings were also well catered for with a pleasantly wide variety of pubs and clubs. It was quite a surprise to find places as cool as Ministry of Sound, HedKandi, Hard Rock CafĂ© and Havana Club there already, plus the very exclusive (and expensive) Little Buddha – a sister operation to the famous Buddah Bars of Paris and New York. There were also bars and restaurants catering for all tastes, including an Irish Pub, naturally.

I was also quite amazed at the amount of extremely large (and obviously expensive) yachts that were moored in the Marina and out in the sea. I have no idea who they belonged to and where the owners go when they are on land as there seemed to be few places for millionaires and oligarchs to feel completely at home in ludicrously exclusive and expensive restaurants and clubs. Even the most luxurious of the resorts were very affordable compared to even mid-market hotels that you would find in Dubai, for example, so I can’t really imagine that the owners of these yachts would particularly want to mingle with us middle-lass hoi-polloi.

In general though, whatever the age group of the visitor, there is going to be something in Hurghada to entertain them, although maybe less so for the older generation of retirees.

In general, prices were lower than I expected them to be. These days my benchmark prices are Eastern European prices rather than those in the UK. I didn’t find Turkey to be particularly cheap, but I was pleasantly surprised how affordable Hurghada was in general (although it is possible to spend some serious dough at the more upmarket places). Being a Muslim state, alcohol was a notable exception to the generally low prices. Beer is readily available in most places (although quite a few restaurants are completely dry) prices at around EUR2.00 a pint. Spirits were harder to find and more expensive though – around EUR6 a pop. They also seem to be impossible to get hold of in regular shops and supermarkets and only available in the hotels and better-stocked bars.

The mix of nationalities to be found in Hurghada also came as a bit of a surprise to me. A very large proportion of the tourists were Russian, with many Eastern Europeans – Poles, Czechs, Slovaks, Ukrainians, etc. – also in attendance. This is perhaps not too surprising when looking at Egypt’s position on the map. Eastern Europeans really have no other closer alternative for winter sunshine, whereas Western Europeans have guaranteed winter sun closer at hand in Morocco or the Canary Islands. Italians were one of the first nationalities to start visiting Hurghada in their numbers, but there seem to be less of them there now. The remainder of the tourists were spread from throughout Western Europe – Germans, Dutch, Scandinavians, etc. The British seem to be in a minority currently, but it looks as if they are becoming a more and more important part of the tourist mix, especially now that the word is out that there are good possibilities for property investments in the region.

Despite this jumble of nationalities, I was quite surprised at how empty Hurghada seemed while we were there as I expected the place to feel a lot more bustling and crowded than it was. We didn’t see a traffic jam in the whole time we were there and, apart from in Sekalla at times, the pavements were easy to walk down without having to barge through a throng. Maybe it was especially quiet while we were there as our visit coincided with the end of Ramadan when few of the local Egyptians were working and were away with their families. The numbers of tourists milling around seemed a lot lower than I expected as well. We did a tour of the clubs on a Saturday night and they were mostly very empty. OK, so it was right at the start of the tourist season (we took the earliest charter flight that we could get out there), but still we found it hard to get accommodation as everywhere was booked already. Certainly the airport coming back was completely packed with tourists flying in and out of the place. So where the hell were they all hiding? Perhaps a lot of them are less adventurous than us though and rarely ventured outside the all inclusive sanctuary of their luxury resorts for fear of discovering what the ‘real’ Egypt looks like.

The lack of more tourists did start me worrying that yields are going to be going way down as more and more property is finished, but we’ll talk about that in more detail later.

To conclude my general observations on Hurghada, I have to say that I was very pleasantly surprised about it. I wouldn’t, by choice, go back to either Alanya or Tunisia again as I found them both to be rather dirty and boring as well as a little downmarket for my semi-snobby tastes, but I could easily see myself going back on holiday to Hurghada again, purely for holiday purposes.

That’s enough of the Rough Guide/Lonely Planet information to Hurghada in general. If you want more tourist information on the region, there are plenty of more detailed guides around. You’re reading this, I presume, because you want to know what the current situation with the property market is. Is it still a good deal? Where should you buy, where should you avoid and what kind of prices are you likely to be paying.

Hopefully I should have the main bulk of the report finished in the next two or three days where it will appear on the main Propertastic! site.
I will post a link to it from this blog as well so that you know as soon as it is up and ready to read.

4 comments:

Peter Mitry said...

Hi Nick

Read your blog on Hurghada with interest. As you know I manage most of the agents for Resort Alliance in Spain, UK & Ireland. Did you visit Sahl Hasheesh during your trip? If so what were your impressions? I see you live in Stratdord on Avon - thats where my wife and I came from before moving to Spain.

Peter Mitry
www.thepropertyshopinternational.com

Nick @ Propertastic! said...

Hi Peter,

We certainly did visit Sahl Hasheesh - spending most of an afternoon there.

We were very, very impressed as everyone will soon be able to read in the Complete Guide that I wrote upon my return.

The Guide has been finished and has gone out to the trade to check for errors. It is currently scheduled for being available as a free download around 22 November.

That's interesting that you and your wife also came from Stratford. Now I split my time between there and Latvia.

It's a lovely place, but it seems like an awful lot of people end up wanting to get away from it!

Independent Advisors on Egypt said...

Nick,

Would you like to join our clean up campaign, we are working with many of the dive centres and hotels along the Red Sea to start an organised clean up operation on a weekly monthly basis.

I hope you can join us.

Regards

Jeff Scott
Worldwide Destinations
www.wwdsales.com

Nick @ Propertastic! said...

Hi Jeff,

Sure - we would be glad to add our support to any initiative that makes Hurghada better.

My girlfriend is learning to dive and has commented that the shallow parts of the coast are pretty dirty, which is a shame.

Let me know what we can do to help out.