For more than five years, Egyptians have been looking for a safe and profitable haven for their savings and for a long time the US dollar was seen as the safest bet. However, as Egypt currently faces huge shortages in foreign currencies, the price of the US dollar, which did not record more than EGP 5 before 2011, has drastically increased.
Now, as the government prepares to implement currency reforms aimed at devaluing the Egyptian pound to allow it to float on free market rates, the state of its rate as compared to foreign currencies is called into question, leaving many that are looking to invest and save unsure about what the best options for investment really are.
The head of equity research in Pharos Holding for Financial Investments Radwa El-Swaify said that the real estate market has not achieved a high profit rate for its investments since January, explaining that the market prices rate didn’t increase by more than 10% in 2016.
Even still, she noted that real estate remains the most attractive safe haven for investors who want to make long-term profits in the current term, adding that it would be the best haven in the next three to five years.
El-Swaify said foreign currencies, especially the US dollar, are not going to increase by the same rate in the next term due to economic reforms the government might soon apply. The value of the US dollar in the unofficial market increased approximately by 50% since the beginning of 2016, reaching a value of EGP 16 in this most recent period. The rate of increase, however, is going to stabilise in the next year unless the government leaves the current situation as it is now without reforming, she said.
She believes that the real estate market is currently a providing huge supply, which it seems will remain high in the next term. That would reduce the demand within a year, which might affect the prices negatively, she noted.
About the demand, El-Swaify said that according to real estate companies, almost 80% of the demand is for real housing needs and 20% is for investments, which she sees that the rate is not reflecting any dangerous consequences. She explained that if the rates were real, the demand would have decreased, and if not it will remain high, which would create a bubble and that might be bad for the economy.
With the current interest rate that banks provide, El-Swaify said that the current diversification of saving accounts cannot provide good profits if the interest rate is lower than the rate of inflation
The banks wouldprovide a good interest rate if the inflation rate was lower than the interest rate, but even in these circumstances savings accounts are not viewed as the best safe havens.
Having gold as a safe haven has always been an option.
The managing director of Multiples Group Omar El Shenety said that gold is a better option for investors than the US dollar because saving it is not forbidden and its value is still linked to international values because it is a global commodity.
He believes that real estate is the best choice for sensible investors and that the two different investment options, gold or real estate, cannot be compared due to a difference of factors.
“Both, however, are better than US dollars,” he said.
According to Goldprice.org, the price of gold in Egypt increased this year by 20.4%.