Tarek Eid, CEO of the Arabian Kuwaiti Group, has emphasized the growing importance of fractional real estate investment as a key strategy for small investors looking to access the profitable real estate market without the need for significant capital.
Eid explained that fractional investment allows individuals to purchase shares in luxury properties, mitigating financial risks while diversifying their portfolios across various projects and regions. This model creates opportunities for smaller investors, who may lack the financial resources to buy an entire property, to benefit from steady rental income and the flexibility to easily sell shares. This provides greater control over their investment strategies, without the financial burden of full ownership.
According to Eid, fractional investment plays a crucial role in the growth of the real estate sector by enabling participation in large, high-value projects that would otherwise be inaccessible. He noted, “The fractional investment model has witnessed significant growth in Egypt, particularly with rising property prices and extended installment periods. Recent reports indicate that property prices have surged by over 70% between the first and second halves of 2023, making fractional investment an increasingly attractive option for a broad range of investors.”
Highlighting the lucrative potential of certain real estate assets, Eid revealed that serviced residences offer a return on investment (ROI) of up to 25%, compared to 15% for residential units and 8% for office spaces. He stressed that hotel apartments are particularly appealing for those seeking high returns. The Egyptian government has shown strong support for this sector, allocating EGP 50 billion (roughly $1.6 billion) to fund new hotels and expand hotel capacity, further boosting the attractiveness of fractional investments in hospitality.
Eid noted that this investment model fosters sustainable growth in Egypt’s real estate sector, particularly as demand rises for modern residential and commercial projects. This demand has driven record-breaking sales in large real estate developments and branded residences.
As part of this evolving landscape, real estate funds have emerged as an innovative solution to broaden the investor base and facilitate fractional ownership. These funds allow both individuals and institutions to invest in the real estate sector without requiring full property ownership.
Eid highlighted the Egyptian Real Estate Fund as a pioneering example in this field. It has completed its first acquisition, a commercial mall, which is now part of the fund’s portfolio, marking a strong entry for real estate funds in the Egyptian market. Several other real estate funds are expected to begin operations soon, reflecting the ongoing momentum in Egypt’s real estate market and the growing demand for fractional ownership.
Eid concluded by stressing the importance of collaboration between real estate companies and investors in creating an attractive investment environment. Such partnerships are essential to fostering greater participation in Egypt’s real estate sector, a key driver of investment in the local economy.
