Buying Real Estate in Sinai NEW LAW

New ownership regulations in Sinai

A series of recent changes in the regulation of land and property ownership in Sinai are said to protect national security, but to the foreign residents and dual nationals of the area, the changes are disconcerting and potentially economically damaging.
It all started with Law 14 and its implementing statute, which were published last year in the Official Gazette in January and September, respectively. The law restricts land and property ownership in the area to Egyptians who hold no other nationality, and who are born to Egyptian parents.
Ownership for legal entities is limited to corporations whose capital is wholly owned by Egyptians under the law. The law further restricts usufruct rights to 30 years, extendable to a maximum of 50 years if approved by the authorities, for foreigners.
Then, Defense Minister Abdel Fattah al-Sisi in December, through Law 203/2012, banned the private ownership, rental and use of nearly all land in the span of the five kilometers west of the eastern border with Gaza and Israel, with the exception of Rafah town. The law also bans the private ownership, rental and use of land on islands, protectorates and archaeological sites in the Red Sea Governorate.
South Sinai Governor Khaled Fouda told Al-Masry Al-Youm in November 2011 that the law seeks to allow land ownership while safeguarding national security.
These regulations are the latest in a series of legal measures addressing land and property ownership in the peninsula.
In April 2005, then-Prime Minister Ahmed Nazif passed a decree restricting the right of non-Egyptians to 99 years usufruct. A second decree in 2007 restricted the rights of Egyptian investors to 99 years usufruct.
Political implications
With regard to Law 203, the ban on private ownership, use or rent of borderline land in Sinai is “because of the military importance of this region as a border line,” a military spokesperson told Turkish news agency Anadolu last month.
The decree should be taken at “face value” as a counter-terrorism measure taken in the light of the attacks on soldiers, armed gangs incursions into Israel from Egypt and tunnel activity, says Issandr El Amrani, a writer on Middle East affairs who blogs on the Arabist, a widely-read site covering regional affairs.
Several attacks on security targets and ongoing border infiltrations have been facets of the uncontrolled peninsula, especially following the uprising that toppled Hosni Mubarak.
“It is a straightforward prevention of anything happening close to the border. The border is a very sensitive, possible flashpoint,” Amrani adds.
“There is tremendous pressure on Egypt to ensure that the area is under control. If something happened there it could escalate very quickly,” he says.
The military ban comes following and in contrast with earlier officials talk about the possibility of opening a free trade zone between Gaza and Egypt to encourage economic ties and cut down on the thriving tunnel economy.
Meanwhile, some Bedouin leaders voiced their rejection of the decision, especially because the ownership in the five-kilometer zone consists mostly of Bedouin tribesmen. Ibrahim al-Meniei, head of the Sinai Tribes Union, told Al-Masry Al-Youm that the tribes have given the government a deadline of 30 January to reverse the decision.
Economic implications
Law 14, lawyer Zeiad Yehia suggests, had a “dramatic” effect on the real estate market in Sharm el-Sheikh, where foreign investment is a key player.
The implementing statute passed in September “added to the suffering of the Sinai real estate market.”
“Foreign investment in the Sinai Peninsula, including Sharm el-Sheikh and Dahab city has ceased completely, and now millions of Egyptians are starting to suffer economically,” Yehia says.
The law has prompted panicked reactions from existing landowners in Sinai. Of particular concern was Article 8 of the implementing statute, which states that any Egyptian who acquires a second nationality must sell his land or property to single-nationality Egyptians born to Egyptian parents “within six months of the date of application of these regulations.”
The unclear wording of this provision initially prompted concern that the law would be applied retroactively, and that dual national Egyptians who purchased their property before the passage of the law would be obliged to sell up.
Article 2 of the laws preamble states, however, that the law and its implementing statute applies only to activities and projects “still under construction,” and that existing projects are subject to the law under which they were established until the expiry of their terms.
State officials such as Fouda and General Shawky Rashwan, head of the Sinai Development Authority, have also stated that the law would not be applied retroactively.
Meanwhile, Nader Sharqawy, a writer and member of the Free Egyptians Party who has lived in Sharm el-Sheikh for 20 years, says that after a meeting with General Tareq Saad Eddin, head of the Tourism Development Authority, Sinai landowners and investors were given verbal assurances that the law is not retroactive and that the prime minister is considering freezing the law.
Nationalist sentiments
But dual national Egyptian property owners remain critical of the distinction made in the law between single and dual national Egyptian citizens, and the repercussions it will have in inheritance matters.
Murad Mikhail, together with other dual national residents of Sinai, began the “Ana Masry Gedan” (“Im Very Egyptian”) Coalition in response to the law.
The coalition has held meetings with officials during which property owners, investors and others sought clarity about such issues as dual national rights and retroactivity under the law.
Mikhail, whose mother is German, says he “will never accept the law.”
“My family has served this country for 50 or 60 years. With this law, they took away my identity and I will never accept this, even if I lose everything,” Mikhail says.
Hamdy Samy, an Egyptian-Belgian dual national who runs a search-and-rescue service in Sharm el-Sheikh, moved from Europe to Sinai in 1999 because he felt “reassured” about investing in the area.
“When I read the law I felt humiliated. I feel Egyptian and love my country, and youre telling me that because my mother is Belgian, you categorize me as being less than a pure Egyptian,” Samy says.
Samy is of the view that the law, which he describes as “racist,” was passed to stop Israelis obtaining land through mixed marriages or to allow the government access to land at cheap rates.
Investors and workers rights groups in South Sinai have sent a legal memo authored by lawyer Mamdouh Mostafa to Saad Eddin in which they state that Law 14 flouts both the principle of equality enshrined in the constitution and Egyptian nationality law, which does not distinguish between single and dual national Egyptian citizens.
The memo also points out that the law discriminates against dual national Egyptians in the issue of inheritance by forcing them to sell any land or property bequeathed to them, in violation of the civil code.
The memo recommends that dual nationals be treated like single nationality Egyptians, and that they be allowed to inherit property and land.
While the right of dual nationals to inherit land is not explicitly stated in the law, Article 2 states that, where land or property has devolved to non-Egyptians by way of inheritance, the heirs must sell it to a single national Egyptian with two Egyptian parents within six months.
“Are Egyptians who have another nationality not Egyptian? There are deliberate efforts to falsify facts. Were not talking about Egyptians who hold another nationality, were talking about non-Egyptians. The text is clear,” Rashwan says, giving the example of an Egyptian married to a foreigner: When the Egyptian dies, his children would be allowed to inherit his property, but not his wife.
The case is different, however, when a single national Egyptian landowner in Sinai acquires another nationality since the coming into effect of the law.
“He has the right to usufruct. He can give up his other nationality — why does he want it? ... You have to take into account that the other nationality could be from the East or West, or even from neighboring countries — and you know what Im talking about. Obtaining a second nationality is a matter of volition,” Rashwan says.
On the matter of dual national Egyptians born to one foreign parent who are denied the right to own land in Sinai, unlike their single nationality counterparts, Rashwan asserts that there exists a similar system in other countries where land ownership is restricted to usufruct in such cases.
Yehia suggests that although the aim of the law is to protect Sinai land, “that protection has gone too far...and instead destroys the very core of the Egyptian real estate foreign market in the region and the dreams of millions of Egyptians for a better life.”

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