Your guide to desert lands ownership law

Amid a foreign currency crisis, Parliament approved a government proposal on January 3 to amend the law regarding the ownership of desert lands. The amendments, ratified by President Abdel Fattah al-Sisi today, allow foreigners, regardless of their nationality, to own desert lands in the country without any exceptions or limitations to specific areas. The government attributed this move to its desire to encourage investment.

However, concerns have been raised about Egypt’s national security, as the timing of the amendment's approval coincides with international warnings of Israel’s plans to force Gaza residents to relocate to Sinai. Additionally, the lack of restrictions on the amendment, such as excluding Israeli citizens from land ownership or confining it to specific areas, has further fueled these concerns, which were expressed by a number of opposition members in the Senate.

Despite authorities’ usual sensitivity toward issues related to Egypt's national security, government representatives and allied parties have asserted that the matter solely concerns investment. They emphasized that "in the end, the investor will not just take the land and leave."

But what does this amendment to the law on desert lands actually mean? Does it apply to the lands of the Sinai Peninsula? And what are the implications of approving this law? Mada Masr spoke to MPs to answer these questions and prepare this guide.

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What was the position of foreigners regarding ownership of desert lands before the amendment?

Since 1963, stringent regulations have been put in place by authorities, prohibiting foreign ownership of lands, be they agricultural, undeveloped, or desert. In January of the same year, former President Gamal Abdel Nasser issued a law to regulate this ban, which included a sole exception for Palestinians who received national treatment at the time, granting them temporary ownership rights over Egyptian lands.

After the Nasser era, this ban was gradually eased for all types of lands, except for desert lands. In 1981, President Mohamed Anwar al-Sadat issued the 1981 desert lands law, which categorized state lands into four types, placing them under the supervision of the defense minister, along with other ministers depending on the designated purpose. These four categories are:

1. Lands of strategic military importance, which are prohibited from being owned by anyone, designated for military purposes or other specified purposes at the defense minister’s discretion.
2. Lands designated for agriculture and reclamation, managed and utilized by a department under the Agriculture Ministry, after consultation with the Defense Ministry.
3. Lands of which management, administration and utilization have been assigned to the New Urban Communities Authority following coordination with the Defense Ministry.
4. Lands and structures which the defense minister asks the Cabinet to expropriate or temporarily seize for reasons pertaining to the protection of internal or external national security or the preservation of antiquities.

With the exception of the first type, the law permits foreigners to acquire these lands as long as an Egyptian party holds at least 51 percent ownership.

The restrictions on foreign ownership of lands continued to be eased over time. In 1988, former President Hosni Mubarak issued a law to amend land ownership in 1988, which allowed foreign individuals and entities to own vacant lands and properties for residential purposes, alongside licensed investment activities. However, this law imposed conditions such as limiting residential ownership to areas not exceeding 3,000 square meters, and requiring the transfer of the lands’ value to Egyptian banks in foreign currency, with exceptions granted by the prime minister. Prior to this, in 1985, the ban on foreign ownership of agricultural lands, originally introduced by Nasser, was lifted.

As for desert lands, full ownership remained prohibited for foreigners. In 1991, Mubarak made a minor amendment to the law issued by his predecessor in 1981, outlining the requisite for Egyptians to hold at least 51 percent of the shares of any company owning desert lands with foreign participation, while individual ownership (whether Egyptian or foreign) in this company should not exceed 20 percent of the shares, whereas the previous law allowed only 5 percent ownership.

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National treatment

In April 1988, Mubarak introduced an amendment to the law on desert lands, allowing individuals holding citizenship of an Arab country to own desert lands, if they are granted national treatment by presidential decree, issued based on the president's assessment and with the Cabinet's approval. This led to a series of presidential decrees treating Saudi, Emirati, Qatari and Kuwaiti citizens as Egyptians. The most prominent of these was Mubarak's 1999 decree granting Saudi Prince Mamdouh bin Abdulaziz al-Saud national treatment, enabling him to officially document his ownership of over 102 acres in the Green Belt area of Wadi Natrun.

In 2022, President Abdel Fattah al-Sisi issued a decree allowing the transfer of ownership of these lands from the Saudi Prince to his granddaughter, Princess Nouf bint Muqrin, and his grandson, Prince Abdulaziz bin Muqrin.

Moreover, in 2017, Sisi issued a decree granting late Kuwaiti Emir Sheikh Sabah al-Ahmad al-Jaber al-Sabah national treatment, which allowed him to officially document his ownership of two plots of land totaling 134 acres and 4 kirats, and 16 shares in an area belonging to Sharkia governorate.

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So what is new in the law approved by the Parliament regarding foreign ownership of desert lands?

The new amendments lifted the ban imposed since 1963 on foreign ownership of desert lands, allowing investors — regardless of their nationality — the right to acquire them for investment purposes.

According to MP Atef Maghawry, the amendments have conferred on the General Authority for Investment and Free Zones (GAFI)the power to oversee the allocation of desert lands to investors. This means that foreign investors can apply to obtain any desired area of desert land and GAFI will then coordinate with the landowner to allocate the land to the investor under a freehold system, after obtaining the necessary security approvals. The contract will not be subject to public scrutiny, as its terms will not be published in the official gazette, and its provisions cannot be challenged by citizens. This is in accordance with the Appeals Against State Contracts Act, which restricts the right to appeal or challenge the contract, namely to GAFI and the foreign investor.

In addition to investment activities, the amendments maintain the existing requirement that Egyptians must own 51 percent of the shares in any company owning desert lands where foreigners participate. The amendments also maintain the exception granted by the president to any Arab national seeking to own desert lands for non-investment purposes that they shall be treated as Egyptians.

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What about Sinai lands?

Sinai lands, which include the governorates of North and South Sinai, as well as cities and areas in the three Canal governorates (Ismailia, Port Said, and Suez), are subject to the law on integrated development in the Sinai Peninsula, issued by the military council in January 2012, and its amendments. This law prohibits the ownership, usufruct, or leasing of lands and properties located in militarily strategic areas, border areas, nature reserves and Red Sea islands.

With the exception of these areas, the law only allows Egyptian nationals to own establishments in Sinai, while the land is allocated to them for use under a 50-year usufruct agreement. The president has the authority to issue decrees allowing ownership of establishments in Sinai to citizens of Arab countries after granting them national treatment.

Even in the cities of Sharm el-Sheikh, Dahab, and the tourism sector in the Gulf of Aqaba in South Sinai, which were exempted from the law by Sisi in March 2022, ownership of lands and buildings is limited to Egyptians and individuals granted national treatment. They are granted the right to transfer lands and properties to others (Egyptians and foreigners) under a usufruct system for a period of up to 75 years, provided they obtain approval from the interior and defense ministries, as well as the General Intelligence Service.

The law on integrated development of the Sinai Peninsula stipulates that any investment project involving non-Egyptians must take the form of an Egyptian joint stock company with Egyptian nationals holding a minimum of 55 percent of the shares. The same requirement is stipulated in the presidential decree regarding Sharm el-Sheikh and Dahab. However, the decree does not specify a minimum percentage of Egyptian ownership. It merely emphasizes that no changes should be made to the names of founders, partners, their shares, or amendments to the articles of association and contracts, corporate form, or public or private offerings of securities without obtaining approvals from the interior and defense ministries, in addition to GAFI.

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What about the impact of foreign ownership of desert lands on national security? 

There are two answers to this question: the first represents the government's perspective, which asserts that there are no concerns about national security. House Defense and National Security Committee head Ahmed al-Awady tells Mada Masr that opening the door for foreign investors to own desert lands is an idea among many adopted by the state recently to attract investors and boost the country’s foreign currency reserves. He pointed out that the government has an investment map that outlines the lands available for sale for investment purposes.

In any case, according to his opinion, these lands are not sold to Egyptian, Arab or foreign investors without consulting the Defense Ministry, intelligence bodies, and other sovereign and security agencies to ensure that national security considerations are taken into account in all aspects of the project.

"Neighboring countries grant privileges to attract investors. A country like Morocco grants land for free to investors to encourage them to invest there," says Awady, emphasizing that "an investor who comes to invest in a fixed asset will not be a source of concern. In the end, they will spend on that asset, employ Egyptians, and if they want to sell it, they can do so and leave. And if the state needs the land, it can reclaim it and provide compensation."

On the other hand, there is another political current that argues that this decision opens the door to selling a large portion of Egypt's lands, allowing foreign investors to exert control over Egyptian political decisions.

Maghawry describes lifting the ban on foreign ownership of desert lands, coinciding with the genocide of the Palestinian people and the repeated statements by Israeli officials about attempts to relocate Gaza residents to Sinai, as "suspicious.” These include discussions about Egypt owning millions of uninhabited housing units in new cities and its potential capacity to accommodate Palestinians in exchange for about US$20,000 for an "apartment." Furthermore, Israel has indicated it has partners capable of building dozens of cities, in addition to its tempting offer to cancel Egypt's external debts and inject billions of dollars into the Egyptian economy, according to Maghawry.

Maghawry emphasizes that he supports investment and does not object to granting lands to "serious" investors, but it should be done "with a usufruct system, even for free, so that the state remains in control of the lands," he says. The government must specify the sectors that require investment in the country, he adds.

"We welcome investments in the agricultural and industrial sectors, but leaving the matter without control, as is currently happening, can lead to investors establishing entire cities for Palestinians or others," says Maghawry. Without controls, Maghawry goes on, the law approved by Sisi on Thursday could be a ticking time bomb that, once it explodes, could leave unrectifiable political and economic damages.