Despite a depreciating pound, double-digit inflation, and regional tensions, foreign investors continue to pour billions into mega greenfield projects in Egypt in response to the government’s accelerated plans to build new coastal cities.

The latest investment was last year when the U.A.E. pumped $35 billion into the construction of Ras El-Hekma on the Mediterranean coast, igniting the push for more new destinations.

At AmCham Egypt’s Investment Conference in April, government and private sector speakers from the real estate industry discussed the opportunities, challenges, and role of the private sector and Egyptian developers in building attractive new cities. 

Government plan 

According to Abdelkhalek Ibrahim, assistant minister for technical affairs at the Ministry of Housing, Utilities and Urban Communities, “Egypt’s national strategy 2030 divides the country into economic zones and cities, while having two types of cities: national and international.”

Primary areas attracting international investors are the Red Sea, the North Coast, and the Suez Canal. “A successful example for drawing international investment is the Ras El-Hekma project in the north coast,” Ibrahim said. 

He noted the backbone of the government’s vision is the Egyptian Gateway project (Bab Misr) that was prepared in 2014, an ambitious initiative starting from the north with the Suez Canal, linking with both North and South Sinai. 

Currently, there are three main projects under development in that region to position Egypt as a prime international investment destination: New Suez, an industrial and logistics center; Saint Catherine, envisioned as an international tourism destination in Sinai; and the development of the Galala Metropolitan Region. 

Ibrahim highlighted the government’s projects, such as the Central Business District in the new capital, which will serve as a financial center for the Suez Canal and the North Coast. “This district will be the hub for financial and investment activities in Egypt, as well as the eastern region of the country.”

When asked about the plans to develop new cities, Ibrahim said the government will continue its efforts to accommodate the growing population and future expansion. “We need to improve the urbanization level, and this comes from the new cities, so we’ll continue working on the first phase of the fourth-generation cities.”

Ibrahim said the previous development phase was the “public investment phase.” He explained that large-scale government projects, such as New Alamein, were the key drivers of international interest in constructing new cities like Ras El-Hekma. 

He stressed the next phase will be different, as the government seeks to foster stronger partnerships with the private sector. The “New Urban Communities Authority, a state-owned enterprise affiliated with the Ministry of Housing, now has more than 85 development projects in collaboration with the private sector,” he said.

Ibrahim emphasized the government’s aim to foster greater collaboration with the private sector, saying the Ministry of Housing is actively working with Saudi Arabia, the U.A.E., and other neighboring countries to facilitate future investment opportunities.

All-inclusive approach 

To foster the country’s competitive edge, Shehab El Orabi, general manager of Modon Developments, emphasized the strategic importance of attracting significant investments such as the Ras El-Hekma project.   

He said the government’s primary approach involves tackling the challenges facing other destinations in Egypt as well as obstacles encountered when planning new cities. The key to success will be to “have a master plan that will cater to all of the fabric of the community,” he explained, adding that coastal cities shouldn’t be seen only as summer destinations. 

“The working class and the middle class of any community are the anchors behind building a city,” said El Orabi. “If we keep that in mind, we can grow the city. Of course, there will be luxury components, there will be high-end luxury housing, but at the same time, there will be offerings for all of the different layers of society … that’s the key vision.”

He emphasized the importance of attracting buyers and investors in Ras El-Hekma, saying, “Egypt holds a competitive advantage over European countries due to its lower cost of living, warmer climate, and shorter commutes.”

El Orabi noted that part of the plan for Ras El-Hekma is to involve Egyptian developers. “The vision for Ras El-Hekma is to represent the Egyptian community and the strength of what Egypt has learned in the past 20 years in terms of real estate development,” he said.

Unified identity 

Ibrahim El Missiri, co-chair of the AmCham Real Estate Committee and group CEO of Somabay, the Red Sea’s winning formula for attracting investors and tourists, is its exceptional connectivity. “The Red Sea wins with its connectivity, airports, and tons of flights,” he said. “We are better connected to Germany than Cairo, as we get [a large number of] flights from Germany per week compared to only 30 from Cairo.”

However, El Missiri noted that challenges persist as the government continues to view the destination primarily as a tourist spot. “For us to get the license to build a school in Somabay, it took us two years because the government was rejecting schools to be built in tourist destinations,” he said. “We’re facing the same challenge when you talk about healthcare.”.

He stressed the need to create a brand and strategy for the Red Sea. “We are so fragmented in the Red Sea that everything has a different identity, yet we are all part of one destination. We should come together and establish a cohesive brand.”

Support needed 

Despite having the necessary infrastructure, it remains difficult for international developers to operate in Egypt. Nabil Alkindi, CEO of Dubai South Properties (U.A.E.) and managing director and founder of Studio International Engineering Consultants, said the government should facilitate entry procedures by creating a flexible e-visa for all nationalities. 

Alkindi said the government could streamline the visa process to make it as efficient as Dubai’s, allowing for quicker approvals. “As a business owner with many foreign employees who collaborate with the Egyptian office, I often face challenges with next-day travel due to the online visa application process. So improving the e-visa system or introducing more flexible visa options would greatly help in facilitating smoother and faster entry for all nationalities.”

Alkindi suggests that a country like Egypt should also improve its marketing strategy, expand its hotel infrastructure, and enhance clearance time in the airports to attract more visitors.

Connecting with neighbors 

Amr Abdalla Attia, principal of PUD Consultants (Saudi Arabia), emphasized that a destination cannot work alone. “It is how you integrate with its surroundings, and this is how it survives and how a community or a destination can become sustainable and attractive,” he said.

He believes the Red Sea presents a unique opportunity for connectivity, “allowing Soma Bay, Gouna, Marsa Allam and Port Ghalib to connect and integrate with each other as well as connecting with Saudi Arabia and other neighbors.”

Localization will make Egypt stand out and will make the country more attractive for tourists, said Attia. “We have unique differentiators that can attract tourists, residents, businesses, and talent.” 

He cited the Ras El-Hekma project as a valuable asset that should be leveraged as a catalyst for urban development and economic growth, adding, “It’s essential to protect and understand its uniqueness.”

This article first appeared in June’s print edition of Business Monthly.