Is Real Estate Investment 100% Safe? And Can It Lose Its Value?

Is Real Estate Investment 100% Safe? And Can It Lose Its Value?

Alaa Muhamed 08 Dec 2024

There are many investment types such as gold, dollar, bank certificates and real estate,but  due to the ongoing circumstances,the most guaranteed investment is real estate, especially in Egypt, even though it's really surprising that some people lose their money In real estate investment while others make good profit, so what's the secret behind those who succeed in making profits? Why can some people make good profits while other people can't?

Nowadays, due to inflation and with the prices rising continuously, the decision to buy a residential unit is a huge risk to take, and many people and investors feel confused and keep questioning how to navigate the real estate market while it's full of changes. And whether the real estate investment in Egypt is the right decision, or will face unpredictable risks. Along with the market changes and economic conditions that may affect the return on profit. And, does the investment success depend on only choosing the location and the developer carefully? Or are there other things to take into consideration? 

Such as the economic study of the area, the type of the property, or the availability of services and facilities. Do those factors play an important role in determining the value of the property in the long term?

 All these questions are regarded as pivotal to anyone who's about to enter the real estate market, that's why we at "Inland" offer to help our clients make informed investment decisions by clarifying the most important factors that they have to keep in mind when buying commercial, residential and coastal units, and The best places to invest in are: New Cairo And The Administrative Capital.

There are several types of properties such as (residential property, coastal property, administrative property, and commercial property)

First: residential property :

Buying a residential unit is very important to all people from all age groups, whether they are family or newly married couples, but to make the decision to buy new house, firstly you have to do your research and to know what your needs, and the appropriate location, and who's the developer, and does this compound offers its residents a complete residential community, all these questions need to be answered before buying any residential units.

That's why we are here, to guide you help you organize your thoughts, and make you aware of all the factors that you should take into consideration before buying a new home.

Fırst: The Location:

 The Location of the unit plays a fundamental role in the value of the residential unit, it's either high or low depending on the location. The value of the location depends on its proximity to the new roads and the ease of access, it's important for the compound to be in a vital area, that's close to all the services and facilities such as schools, universities, and hospitals. It guarantees you quick access to any place you want without getting out of your compound often.

A factor that many people overlook when buying a residential unit, but it is actually so important, it's what's nearby the compound. Are there any industrial or cemetery areas that may affect the quality of the surrounding environment? This may cause a lot of inconvenience and discomfort and will surely reduce the value of the unit when selling it in the future. Therefore, you should do extensive research on the location of the residence, and whether it's in a vital area or not.

Second: The Developer:

Many people focus only on the location and the type of the unit, and most of them don't even care about who the developer is, although it's a very important factor that may make them lose the value of their properties. The real estate developer is the backbone of his project and his reputation is a double-edged sword.

That's why you should know who the developer is what is his previous work and who owns the company. And does the company adhere to delivery dates and care about the quality of its work? Did the previous projects of this company achieve success in the real estate sector or did their projects become unknown?

All these factors can affect the value of your unit in the present and the future, in order not to lose the value of your property, you should also know who the developer company is cooperating with to create the master plan for the project. When the developer cooperates with well-known design companies that have a strong portfolio and huge financial cloak, this guarantees that you will get a property with high value and its value won't decrease in the future.

Among the most famous companies specializing in design and master plans in Egypt are: Hafez consultants, which was a major reason for the success of many real estate projects. And also WTAG company.

Also, it is recommended that the real estate developer of the project be a constructor, Such as Hassan Allam, SODIC, or Dora Company. As we all know about the mark that Hassan Alam and SODIC have left in the world of real estate.

Hassan Alam's most prominent projects are Park Central Mostakbal City and Swan Lake's north coast.

SODIC most prominent projects are Portal Sodic and June Village North Coast.

You can read this article if you are interested to know more information about Hassan Allam Real Estate Development Company. 

Who is Hassan Allam?

Third: Maintenance Fees:

Before Purchasing your residential property, you must know the maintenance costs, because it will tell you whether the quality of services is good or bad, and whether will it remain as good over time or not.

Some people consider the low maintenance costs as an advantage, but surprisingly it's the opposite. Because in most cases this indicates a low level of services available within the project in terms of the cleanliness of the compound, periodic maintenance services, quality of infrastructure, and security. All of this can affect the quality of life within the compound and for sure will reduce the value of your unit if you want to sell it in the future.

Therefore, maintenance costs must be appropriate with the services provided by the compound, neither too high nor too low. That's why you have to know the maintenance costs before purchasing and what they include.

Fourth: Mega Compound:

One of the common misconceptions among customers is that the larger the compound area, the more charming it is. Some believe that this will provide them with a lot of green spaces, privacy, and entertainment services, of course this is possible. However, these projects have a disadvantage, which is that they take a lot of time to build due to. Their large size, which is usually more than 600 acres.

This can lead to a lack of necessary services such as entertainment facilities, shops, schools, or even green spaces, which affects the quality of life and the overall luxury of the place.

Despite that, there are some successful Mega Compounds such as: the Badya compound, and Tag City compound.

And most importantly, buying a residential unit in an unfinished place may lead to a loss in the value of the property in the future. Because how can anyone buy a residential unit in a place that is still under construction or does not have services?

Fifth:  Determine Your Needs:

It's important to determine what you want and what you are looking for, before even studying the state of the Egyptian market and economy, the locations, and the developer. Because knowing what you want will save you a lot of searching, you must organize your thoughts before buying and know whether you are buying this residential unit for rent, sell or to live in.

when buying any unit, you must think about the future, because if you are planning on having children, for example, you cannot buy a unit consisting of only two rooms, because you will definitely lose your money.

if you are a real estate speculator “Flipper” and want to speculate in real estate and benefit from price differences, but you do not have the installments of your unit until the date of receipt, you will face a big financial issue, and this is considered a loss in real estate investment.

Coastal Property

Many people are interested in buying a chalet in the North Coast or Ain Sokhna to enjoy vacations with family or friends, but sometimes they overlook some important details that may affect the value of the property and make it an uncomfortable place for them and not suitable for the relaxation they are looking for.

Because the prices of coastal properties are constantly rising and the demand for them is also rising, we at Inland decided to provide you with some tips that you should know before buying any chalet in a coastal location so that you do not lose all your money. Which  are:

1. Where is the coastal village located?

Putting in consecration the location is important when buying any property, regardless of its type, but why should you care about the location of the chalet or coastal house especially?:

• First, because during the summer we all want to relax in a comfortable place directly in front of the sea and enjoy the beach atmosphere, whether it is the Mediterranean or the Red Sea, and for this reason, it is necessary to know where your unit is located specifically. Is it located in a coastal spot with a sandy or rocky beach? Because if it overlooks a rocky beach, you will definitely lose the value of your coastal property.

• Secondly, is the village next to an oil field? Imagine that you bought a chalet in a place next to an oil field, what color would the sea be? Is it suitable for swimming? Clear? Definitely not. Therefore, you will never enjoy the summer atmosphere you are looking for and you will not be able to sell it to another buyer, which is a disastrous loss. 

• Thirdly, you must know if the resort overlooks the sea directly or if is it on the other side of the sea. Because the location of the village in the opposite location to the beach will definitely cause you to lose your money, and you will not get a sea view, and when you sell this unit, you will lose a lot. In addition, it takes a lot of time to get to the beach from your home. 

• Fourthly, if you want to waste all the money you saved to buy a coastal unit? Own a chalet in a coastal location near industrial areas. Buying a chalet in a place near industrial areas is a completely wrong decision because you will not get the relaxation you want due to the noise, in addition to the environmental pollution emanating from these factories. For this specific reason, you will find that many people have moved away from the Red Sea areas because of the factories and headed to the North Coast instead. But it is also important to mention that Soma Bay and El Gouna, located on the Red Sea, were developed in a proper way and away from factories. 

2. The Seafront

It's always very exciting before the summer season, to go to the sea and enjoy its turquoise blue waters and golden sands, and this vibes will not be compensated by going to a swimming pool. Therefore, it is better for you to buy in a coastal resort that has a large seafront and does not depend entirely on the Crystal Lagoon. 

3. Who is the real estate developer? 

If you decide to own a unit on the North Coast or any other coastal place, you must stay away from any resort developed by an unknown real estate developer. The first thing you should think about is the real estate developer behind the project. The real estate developer is responsible for implementing the project and ensuring its quality, and his reputation is considered a guarantee for the success of the compound and raising its market value.  If the real estate developer is unknown or has not achieved previous successes in similar projects, he may expose you to great risk. Coastal projects need reputable developers who care about the quality of the projects, the services available within the village, the views of all units, and the design. 

4. The village design

 if you are looking for a unit that has a sea view from its location, we advise you to buy a house inside a village designed with a terrace system. Because this gives residents direct sea views, unlike resorts that lack this design, their residents in the second and third rows will not enjoy watching the sea. 

5. What do you prefer and what are your requirements? 

 What are you looking for during the summer season? Do you want to relax and enjoy the peace  or do you want to do various activities? Knowing what you want will make many things easier for you. Such as:

•  If you are one of the people looking for relaxation and tranquility, it is better for you to stay away from villages and areas that are famous for holding events and festivals such as New Alamein City, which has recently become a well-known place for hosting many events and festivals. These activities may be exciting for some, but they may affect the recreational experience you are looking for. Choose the place that matches your own needs, not based on what is popular nowadays.
•  The North Coast season is 3 summer months, so if you do not intend to benefit from these months, we advise you to rent your chalet on the North Coast. If you do not enjoy the summer there or do not rent it and get a financial return from it, this will be considered a big loss of money. 
•  If you are going with your family, look for the right place for you to have the best possible time,  Mountain View Ras El Hekma Village is one of the coastal projects that are very suitable for families. This is because it has  The Light House, is a place that offers a variety of different activities that suit all family members and helps children know their passion and choose the workshops they prefer. 

Finally, make sure to keep these points in minds before buying in coastal villages so that this place can be your comfort zone, where you go to get comfort and peace and to enjoy the best possible vacation, and make many memories with your loved ones.

Commercial and Administrative properties 

Commercial and administrative real estate is one of the most popular types of investments because of the profit it provides. Despite the profits that those who own a commercial or administrative property make when this property specifically loses its value, it is considered a huge loss. Therefore, it is necessary for everyone before making this decision to study some points well. 

Among these points:

• The Operator:

One of the most important factors for the success of any mall in the real estate market is that the company responsible for its operation is known and strong in the field of real estate investment. If the company does not have experience in this field, this will inevitably guarantee failure, due to the poor quality of services, and the mall management will be ineffective. The operator also has an important role in choosing who rents inside the mall and determining the category that will visit the project constantly. Therefore, if you want to attract a certain level of people, you must know who is the operator with whom the developer company is cooperating.

• Master Plan:

As we talked about the importance of the master plan for the residential project, its importance in the commercial project is also crucial. The mall layout and the distribution of spaces, facilities, and services within the commercial project greatly affect whether the project will fail or succeed in the market. In commercial projects, the focus should be on the smart distribution of shops and fast food places, the presence of parking spaces, and public spaces that encourage visitors to interact. 

• Parking: 

Is it normal for a commercial mall or administrative office not to have parking? Certainly not, however, some real estate companies have developed malls and administrative towers without providing parking garages. Of course, if you invest in one of these malls, you will lose your property and money. 

The lack of parking for any commercial project reduces its luxury and causes an unreasonable loss for the developer himself. It's also unreasonable for any investor to think about buying a unit in this mall or even for many people to go shopping. Therefore, garages are one of the factors that determine the success or failure of your real estate investment. 

An example of towers that were abandoned because they did not have parking are: Al-Jazirah Tower in Zamalek, also known as the "Ghost Hotel". It was built during the reign of Anwar Sadat and was completed, but it has not been opened yet because there is no garage. The owner of this tower, Khaled Fouda, tried to provide some solutions to solve this problem, but they were rejected and Al-Jazirah Tower became the tallest tower in Cairo, but it is abandoned! 

So it is really important before buying any commercial unit or office to ask if the mall has its own garage or not. 

• Maintenance and Facilities: 

One of the factors that can cause loss to the value of commercial properties is their presence inside a mall that does not provide sufficient services to visitors. Because malls that do not care about the quality of maintenance and services provided to visitors lose their investment value over time customers do not like to go there, because they do not provide them with what they need. This will of course affect your project in the mall and you will lose your money. 

However, if the mall is located inside a compound, you must ensure the quality of services and periodic maintenance in this compound, are these services sufficient only for those who live inside the compound? Is it enough for residents and visitors to the mall as well?? 

It is very important to think a lot before making a decision to buy a shop or office and to keep in mind all the advantages and disadvantages of the place you choose to start your new project. Do not forget that it is better for the mall to be located close to vital places full of people because this will affect your investment positively. 

Also remember to know who the mall's developer is and whether he has a successful business history in shopping malls in particular or not. Examples of real estate developers who have achieved great success in this field include Al-Futtaim Group, which is well-known and owns many famous malls such as Cairo Festival City, Marakez Company, owner of: District 5, Arco Real Estate Development Company, owner of City Stars Mall, Up Wide Real Estate Company, and among its most prominent works: White Walk Mall, New Cairo. 

In conclusion, real estate investment is not a random decision. It requires a lot of time, thought, and studying the market situation. Before buying any unit, whether commercial, residential, or coastal, you must know what you want and what is right for you. Don't run after the trend and buy in a certain location just because many people buy there, but choose the best for you and your family. It is also better before buying your unit to have a real estate expert with you who has enough experience to guide you.

We at Inland Company are happy to provide you with the advice you are looking for so that the property does not lose its value and you preserve your money. 

You can contact us at 01003366453 if you want to inquire about anything related to real estate investment in Egypt. We will answer you as soon as possible.