Unlocking Investment Opportunities: An Overview of Egypt's New Desert Lands Law

April 8, 2024

Introduction

Law no.143 of 1981 concerning desert lands (the “Desert Lands Law”) has long regulated land ownership in Egypt, imposing strict restrictions on foreign investors seeking to acquire desert lands. However, in a recent legislative development, the Egyptian government has issued on 24-2-2024 law no. 11 of 2024 (the “New Desert Lands Law”), amending specific key provisions of the Desert Lands Law. These amendments significantly benefit foreign investors, simplifying the investment process and encouraging foreign direct investment by exempting investors from certain ownership restrictions. 

Overview

In a significant legislative development, Egypt has recently issued the New Desert Lands Law, which abolished local ownership requirements for land allocation to foreign investors for investment purposes under investment law no. 72 of 2017 (the “Investment Law”). Further, the New Desert Lands Law has introduced new exceptions for nationals of Arab countries and increased the percentage of ownership that individuals can hold in companies owning desert lands. 

This legislative update reflects a continued effort to simplify foreign investment in Egypt’s real estate sector.

Key Provisions of the New Deserts Land Law

  • Amendment of Egyptian Ownership Restrictions:

Article 11 of the New Deserts Lands Law exempts land allocation to investors for investment purposes under the Investment Law from certain restrictions previously found in the Desert Lands Law. These restrictions require Egyptian ownership to constitute at least 51% (fifty-one per cent) of the company’s capital. In other words, it is permissible for foreign investors to own desert lands in Egypt for investment purposes even if there is no Egyptian participation in the company. However, the new amendment upholds the requirement for Egyptians to hold 51% (fifty-one per cent) of the capital of companies owning desert lands for any activity that does not fall within the scope of the Investment Law. 

  • Exception for Nationals of Arab Countries: 

The New Deserts Lands Law provides increased flexibility for Arab national investorsIn case an Arab national investor cannot obtain desert land in accordance with Article 11, Article 12 grants the President the right to issue a decree, after the Cabinet’s approval, allowing the treatment of the said Arab national as an Egyptian for desert land ownership. This provision in Article 12 demonstrates the government’s commitment to attracting foreign investment and enhances the appeal of Egypt’s desert lands to potential investors.

  • Adjustment of Individual Ownership:

The New Deserts Lands Law introduces a significant change, increasing the maximum percentage of individual ownership in the capital of a company owning desert land from 5% (five per cent) to 20% (twenty per cent). This change means that individuals are now permitted to own a larger share of the company’s capital than previously allowed, opening new opportunities for individual investors.

These amendments mark a significant shift in Egypt’s land ownership regulations, aiming to enhance investment opportunities and promote economic growth in the country’s real estate sector. 

The contributors to this article are Fadila Abdelaziz, Counsel, and Sara El Sawy, Junior Associate.

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