Understanding the Risk of Unpaid Land Fees and How to Investigate Safely

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🌍 Introduction to This Blog

This blog is dedicated to sharing up-to-date insights and practical knowledge for those interested in investing in overseas real estate, especially in Egypt.

On our main site, ANKH｜Egypt Property, we not only introduce available properties but also provide comparisons of legal systems across countries, expert reports from professionals working on the ground, and information about related seminars.

If you’re thinking, “I’m interested in international real estate but don’t know where to start,”

we’re here to provide trustworthy information to help you take that first step with confidence.

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Introduction

Egypt is gaining popularity as a destination for real estate investment, thanks to its status as a rising market. However, there are unique risks that are not always visible at first glance.

In this article, we focus on one particularly important risk—unpaid land fees—and walk you through the investigation steps you should take before investing.

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Why Due Diligence Is So Important in Egypt

In the wake of the 2008 financial crisis, many real estate developers in Dubai went bankrupt, leaving projects incomplete and investors with significant losses.

In response, the Dubai government implemented strict regulations, including the mandatory use of escrow accounts to protect investors’ funds.

Escrow accounts are a system in which a neutral third party temporarily holds funds and contracts between buyer and seller, ensuring safe and fair transactions.

In Egypt, however, such regulations have not yet been fully established. This means that it is up to the investor to evaluate the credibility of the developers and projects.

That’s why thorough due diligence is essential before making any decisions.

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Suggested Investigation Process Before Purchasing

When considering a real estate purchase in Egypt, following the steps below can significantly reduce your risk:

1. Evaluate the project itself – Does it make sense as an investment?
2. Check with the Egyptian Investment Authority – Is there any unpaid land fee? Are there signs of financial trouble?
3. Review the developer’s past projects – Any issues or failures in the past?
4. Conduct interviews with the developer
5. Examine the draft contract
6. Negotiate contract revisions – Try to align terms with international standards (some developers may refuse)
7. Understand the overall contract and payment flow

Only after clearing these steps should you move forward with an actual purchase decision.

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Case Study: A Project with Unpaid Land Fees

Several years ago, a project called ENTRADA, developed by SOROUH, was being promoted online to Japanese audiences.

Upon conducting an on-site investigation, it was discovered that the developer had not paid the land fees to the government. At that time, the project was deemed unsuitable for investment.

While it’s unclear whether that issue has since been resolved, the fact remains that the company had allowed such a problem to occur—and that alone warrants serious caution.

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Summary: What Overseas Investors Really Need

Thorough, Independent Investigation—Not Blind Trust

In emerging markets like Egypt, it is dangerous to rely solely on local standards or assurances.

Investors should instead take a proactive approach, applying internationally recognized standards of transparency and credibility.

Understanding local differences in regulation and business culture is key to avoiding risks and making successful investments.

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✉ Feel Free to Reach Out

If you’re interested in Egyptian real estate but aren’t sure where to begin, feel free to get in touch.

We’re here to support you with the latest insights from the field and help you explore your options with peace of mind.