REAL ESTATE NEWS, REPORTING & ANALYSIS
July 2017 - 48 Pages - Issue 4
FUTURE PROJECTS ACROSS EGYPT’S NORTH COAST HOPEFUL TO BOOST TOURISM
INERTIA ELEVATES EGYPT’S REAL ESTATE MARKET REAL ESTATE FUNDS TO UPLIFT EGYPT’S PROPERTY MARKET
NORTH COAST CONTINUOUSLY ACHIEVES REMARKABLE COMMERCIAL GROWTH TDF ARCHITECTS SEES EGP DEVALUATION BENEFICIAL TO THE ARCHITECTURE INDUSTRY IN EGYPT SAFETY CONCERNS DISCARDED OVER EL-DABAA NUCLEAR PLANT VICINITY
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0%
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Where summer moments are waiting to happen
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EGYPT REAL ESTATE
CHALLENGES AND OPPORTUNITIES STRATEGIC ROUNDTABLE
DISCUSSION TOPICS INCLUDE: • Residential Economic Issues & Trends • Commercial Economic Issues & Trends • Federal Legislative & Regulatory Issues • Real Property Valuation • Infrastructure Challenges & Opportunities • Attracting Foreign/International Real Estate Investments • Hospitality/Real Estate Investment in Modern Egypt
OCTOBER 2017 6 | INVEST.GATE | July 2017 - ISSUE 04
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ADVERTORIAL
EDITOR’S LETTER
General Manager Yasmine El Nahas
WELCOME TO INVEST-GATE
Editor-in-Chief Farah Montasser
Our journey across Egypt’s sought-after summer destinations continues. This time around, Invest-Gate invites you on its special ‘Hop On-and-Off Tour’ across the major developmental projects on Egypt’s North Coast. Making it the ever most favorite summer destination to Egyptians and Arabs alike, the North Coast is to receive a major facelift from the government and some of the real estate market key players. In our July “North Coast Special” issue, Invest-Gate visits the many private developmental projects including Jefaira, CityStars, SwanLake, among others. We sit with Inertia’s founders Hussein Rifai and Ahmed El-Adawy to find out more about their take on urban development in the North Coast with their latest mega-project Jefaira in Ras El-Hekma. In a very special interview, El-Adawy shares the Inertia methodology and tactics it introduced to the Egyptian real estate market as it celebrates its tenth anniversary. Readers and young entrepreneurs are invited to explore the world of Inertia and how its problem-solving solution to the many real estate challenges gave it its boost throughout its 10 years of operation and its ability to compete among the “deep pockets driven market”, according to El-Adawy. Elevating the real estate market, Inertia also shares its mission to lift the North Coast of Egypt in order to become a modern Riviera like those of Italy, Greece, Spain, and France. Our hop on-and-off tour looks into the hospitality business in Egypt and the Middle East. Specifically in the North Coast, we tour the major hotels in the area to see the current foreign tourism flow and what measures, currently taken, to boost the
tourism sector. This “North Coast Special” issue sightsees the major governmental projects on site as well, including the New ElAlamein City and El-Dabaa Nuclear Plant project. Invest-Gate tackles the safety issue regarding the development of many residential and tourist sights within its vicinity. As always Invest-Gate voices the people, we highlight some of the prominent architects and interior designers; especially those specialized in designing summer homes. We sit with Hala Saleh, founder and CEO of TDF Architects. Saleh shares her experience in designing summer homes and introduces her modern ‘Eco-Friendly Interior Design’ concept to the architecture scene. We end our tour with a small guide for potential property buyers in the North Coast to help them decide whether to buy or rent a summer home, given the current economic condition of the nation. As the Voice of Real Estate, Invest-Gate aims to cater to all needs from homebuyers to big property investors. We bring you stories covering Egypt’s most interesting and vibrant sector, as it changes under the current economic environment. With the sentiment on Egypt gradually improving, we are delighted to explore how that impacts the most favorite investment outlet.
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Managing Editor Yasmin El-Beih Associate Editor Menna A. Farouk Staff Writer Fatma Khaled Julian Nabil Nayrouz Talaat Market Researcher Hagar Magdy Database Executive Taghreed Mounir Operations Manager Liz Hurley Business Development Director Safaa Abdel Bary Web Master Ayman Rady Art Director Omar Ghazal
EDITOR-IN-CHIEF
Graphic Designer Ahmed Sabar 3D Visualizer Maged Makram Events and Logistics Manager Abdallah El Gohary
Inside this issue p.18
p.26
p.28
Distribution Officer Mahsoub Kenzi Mohamed El-Sayed
IN PARTNERSHIP WITH
Inertia Elevates Egypt’s Real Estate Market
North Coast Continuously Achieves Remarkable Commercial Growth
Untapping Potential of Real Estate Funds To Uplift Ecotourism Can Salvage Egypt’s Egypt’s Property Market Tourism Industry p.38
p.40
p.34
TDF Architects Sees EGP Devaluation Beneficial to the Architecture Industry in Egypt p.42
Publisher MOHAMED FOUAD All rights to editorial matters in the newspaper are reserved by Invest-Gate and no article may be reproduced or transmitted in whole or in part by any means without prior written permission from the publisher.
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Vacation Homes: Buy or Rent?
Safety Concerns Discarded over El-Dabaa Nuclear Plant Vicinity
8 | INVEST.GATE | July 2017 - ISSUE 04
New El- Alamein City Turns Heads As Egypt’s New Riviera
With a wide variety of the top-notch restaurants, cafes and retail venues in Egypt, Telalians by The Platform is set to be the number one destination this summer targeting both Telal residents as well as coming visitors and guests. Built over an area of 8,000 square meters, Telalians by The Platform is situated 18 meters above sea level, making it the highest point in the North Coast with unparalleled views and a sleek magnificent design.
Future Projects Across Egypt’s North Coast Hopeful to Boost Tourism p.32
p.30
Telalians by The Platform: Best Destination for Restaurants, Cafes & Retail in the North Coast.
13D Sherif Salama Street - Takseem El Laselky - New Maadi, Cairo, Egypt Tel.: +202 25164776 +202 25172052 +202 27547569 Fax: +202 25172053 Email: info@invest-gate.me
A hub for some of the finest restaurants and cafés, Telalians by The Platform comprises the ideal tenant mix, ranging from offering a hearty breakfast to a fine summer dinner. So whether you’re looking to grab coffee, lunch with the family, or a place to hang out with friends, Telalians by The Platform is the place for you. Located right outside Telal Gate 2, Telalians by The Platform provides a parking lot stretching over an area of 5,000 square meters inside the venue for Telal residents. It also offers a parking lot with a total area of 10,000 square meters on street level for outside visitors and guests. Also present are elevators taking visitors from street level to Telalians with a maximum waiting time of four minutes. Residents can also enjoy the availability of golf cars and tuk-tuks (auto rickshaws) which are provided in partnership with Dubai-based car hailing app Careem.
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EGYPTIAN GOVERNMENT TO DELIVER LAND PLOTS IN BADR CITY THIS MONTH PALM HILLS LAUNCHES NEW SALES IN PALM VALLEY MALL, PALM CENTRAL
According to a recent statement, the Ministry of Housing and Urban Development plans to deliver 1,999 land plots in Badr City starting from July 9 until October 31, Invest-Gate reports. “During the month of October those who fail to receive land plots on the previous scheduled dates should apply again,” announces Chairman of the Badr City Development Authority, Adel Ibrahim El-Desouki. “Total investments in Badr City reached EGP 2.4 bn since its establishment back
Egyptian real estate developer, Palm Hills Developments (PHD), is launching new sales and reservations in Palm Valley Mall and Palm Central in West Cairo, Invest-Gate reports. in 2014, reaching EGP 4.9 bn in the recent three fiscal years from 2014 to 2017,” Minister of Housing and Urban Development Mostafa Madbouly states.
EGYPT INJECTS FIRST TRANCHE OF WB LOAN INTO DEVELOPING UPPER EGYPT According to the Ministry of Investment, Egypt is injecting the first tranche of the World Bank loan worth USD 125 mn into upgrading cities across Upper Egypt in accordance with President Abdel Fattah El Sisi’s directives, Invest-Gate reports. The program aims at improving the investment climate and boosting industrial development in the governorates of Sohag and Qena, officials say. They add that it also seeks to enhance the infrastructure of such cities and stimulate economic growth. World Bank Country Director for Egypt
and the Middle East, Asad Alam, says: “We are keen on developing the poorest areas in the country, and the program seeks to enhance competitiveness in the governorates of Qena and Sohag.”
The General Authority for Suez Canal Economic Zone (SCZone) recently signed 15 contracts with 13 companies for diverse activities to pump investments into the Suez Special Economic Zone (SSEZ) in Ain Sokhna, Invest-Gate reports.
REMCO TO SELL ALL STELLA HEIGHTS UNITS BEFORE YEAR-END Remco Tourism Villages Construction is to finish marketing all units of the Stella Heights project by the year’s end, Invest-Gate reports. Remco Tourism Villages Construction announces the release of its latest project Stella Heights that is currently marketed nationwide until the end of 2017. The company is expecting sales of about EGP 2.5bn, according to a company statement.
new job opportunities. The Suez Canal Authority managed to activate the “Sonker” liquid drainage project at Ain Sokhna Port with investments worth USD 500mn, according to Mamish.
HELIOPOLIS HOUSING POSTS SALES OF EGP 71.07MN IN MAY
Egyptian construction company, Heliopolis Company for Housing and Development, posts sales of EGP 71.07 mn in May, Invest-Gate reports.
worth of EGP 24.67mn and EGP 12.1mn in Sheraton and El-Obour City respectively, in addition to other units valued at EGP 34.26mn in New Heliopolis.
In its statement, the company announced profits of EGP 71.07mn up until May 2017 with reported sales of residential units
Heliopolis Housing confirms that it is continuing to deliver a number of projects in the different areas it owns.
10 | INVEST.GATE | July 2017 - ISSUE 04
To be completed during 2019, Palm Valley Mall recorded new sales of EGP 360 mn, with selling prices ranging between EGP 55,000 and EGP 120,000 per square meter. Formerly known as Office 8 Commercial Building, Palm Central is scheduled for completion in 2018. A total of 67% of its available space is currently sold out, recording new sales of EGP 110 mn at an average selling price of EGP 38,000 per square meter.
SCZONE TO SEE ESTABLISHMENT OF 15 NEW DIVERSIFIED PROJECTS
In his statement, Chairman of the SCZone Authority Mohab Mameesh announces that the authority has signed 15 contracts with 13 companies to invest in the SSEZ. The projects will cover the fields of petrochemicals and fertilizers, in addition to the manufacturing of medical solutions, pharmaceuticals, and paper products, which will contribute to the development of the area and create
PHD, the giant Egyptian real estate developer, has announced the sales of its latest Palm Valley Mall and Palm Central in West Cairo. The commercial projects’ new sales reached EGP 470mn since its launch in April 2017, according to its press release.
Owned by Remco for Real Estate Construction, a subsidiary of Remco Tourism Villages Construction, Stella Heights is located in the North Coast’s Sidi Abdel Rahman area.
SODIC TO LAUNCH NEW HELIOPOLIS PHASE I END OF 2017 Egypt’s property developer, SODIC, announces that construction work will begin on its latest flagship project New Heliopolis in New Cairo at the end of the year, Reuters reports. The project’s land will be received next November when construction works will begin. The 655 feddan project will be developed in partnership with the country’s state-run Heliopolis Company for Housing and Development.
AMER AND PORTO INK DEAL WITH THARWA CAPITAL TO ISSUE BONDS Egyptian real estate developers, Amer Group Holding and Porto Group, have signed an agreement with Egyptian financial investment and advisory firm, Tharwa Capital, to issue securitization bonds for their real estate portfolios amounting to
MISR ITALIA OFFERS 5% DISCOUNT ON MOUSA COAST UNITS Egyptian real estate developer, Misr Italia, has offered a 5% discount on its units in Mousa Coast during the holy fasting month of Ramadan, Invest-Gate reports.
EGP 281 mn, Invest-Gate reports.
Misr Italia previously offered feasible payment terms for its waterfront chalets with potential buyers required to pay a mere 10% down-payment, according to a released statement.
In a shared statement, Amer Group and Porto Group announced that they have joined forces with Tharwa Capital to issue securitization bonds for their portfolios amounting to EGP 233 mn and EGP 48mn respectively.
Mousa Coast is located in Ras Sedr, 90 minutes away from Cairo. It has delivered approximately 2,500 units thus far and features several amenities and swimming
Both companies issued securitization bonds over three tranches, with Middle East Rating and Investors Service (MERIS) assigning +AA for the first portion, AA for the second and A for the third.
EAGLE HILLS TO BUILD NEW HOTEL IN FUJAIRAH
EGYPTIAN RESORTS COMPANY SWINGS TO PROFITS IN Q1
The Abu Dhabi-based developer, Eagle Hills, plans to build its Palace Fujairah Beach in Fujairah, Invest-Gate reports.
Egyptian Resorts Company (ERC) posts consolidated net profits of EGP 66.08mn during the first quarter of 2017, against losses worth EGP 1.42mn in the previous year, Invest-Gate reports. According to the company’s statement, Egyptian Resorts Company has recorded a profit of EGP 66.08mn in 2017 Q1. Consolidated revenues increased to EGP 121.3mn in the three-month period ending on March 31 from EGP 10.3mn in the same period of 2016. On a standalone basis, profits grew 41% to EGP 41.31mn in Q1-17 from EGP 29.25mn in Q1-16. Total revenues reached EGP 119.8mn in Q1-17 against EGP 10.4mn in Q1-16.
MARSEILLE SETS UP NEW ASSET MANAGEMENT FIRM Egyptian real estate investment company, Marseille Almasreia Alkhalegeya for Holding Investment, is contributing to the establishment Marseille Asset Management Company with a licensed capital of EGP 2.5mn according to a released statement, Invest-Gate reports. The company’s issued and paid capital amounts to EGP 250,000, distributed in 25,000 shares at EGP 10 per share.
pools. The company plans to turn the project into a fully integrated community on the Red Sea, according to its official website.
Located in Eagle Hills Fujairah Beach, the five-star hotel will be managed by Address Hotels + Resorts, the hotel brand of Emaar Hospitality Group. Set to be located on a prime piece of coastline on the Gulf of Oman, the hotel will feature 162 rooms and suites. The project will also offer a health club, cafes, high-quality dining outlets, separate pool
for adults and children, and world-class meeting venues.
MAJID AL FUTTAIM LAUNCHES NEW MALL IN RAS AL-KHAIMAH Dubai-based mall operator, Majid Al Futtaim, unveils a new mall entitled My City Center Al-Dhait with investments worth AED 68.5mn in Ras Al-Khaimah, Invest-Gate reports. Construction works of the project will begin this month, and the project is scheduled to open early next year. The mall comprises 30 stores spanning a gross leasable area of 5,494 square meters. The new project is part of the company’s strategy to increase its total investments in the UAE to USD 1.8bn by 2026.
VINCITORE REAL ESTATE LAUNCHES SECOND RESIDENTIAL PROJECT IN DUBAI
The new firm will manage real estate projects and assets, and operate resorts, tourist villages, malls, and cinemas, according to a bourse statement. Marseille holds a 99% stake in the new company, equivalent to 24,750 shares worth EGP 247,500.
EMAAR MISR LAUNCHES FOUNTAINSIDE RESIDENCE IN UPTOWN CAIRO Emaar Misr announces the launch of the first phase of Fountainside Residence in Uptown Cairo on May 24, Invest-Gate reports. The Fountainside Residence contains two and three bedroom apartments, duplexes, penthouses, and ground floor units with private gardens coming in exquisite interior and architecture. The floor plans range from 148 to 319 square meters.
Dubai’s developer, Vincitore Real Estate Development, unveils its second project, Vincitore Boulevard in Dubai, Invest-Gate reports.
Located in the heart of Uptown Cairo, Fountainside Residence encompasses lush greenery areas, a private swimming pool and spectacular views of Cairo, according to the real estate developer’s statement.
Spanning an area of over 173,337 square feet in Al-Barsha South Arjan district, the project comprises 216 residential
apartments, including plush studios and ensuite one-bedroom units as well as 30 boutique retail outlets. The project is expected to be operational by April 2019. In 2016, the company launched Vincitore Palacio in the same district, the company adds in a statement. THE VOICE OF REAL ESTATE | 11
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JUMEIRAH GOLF ESTATES HIRES CONTRACTOR FOR ALANDALUS PROJECT
NUCA, CANADIAN TRANSPORTATION FIRM INK MOU FOR MONORAIL PROJECT
UAE-based residential and leisure destination, Jumeirah Golf Estates (JGE), is appointing Dubai’s Progress Constructions as the contractor for its townhouses and the retail center of its residential community, Alandalus, in Dubai, Invest-Gate reports. The townhouses are scheduled for handover in September 2018. With
Egypt’s New Urban Communities Authority (NUCA) and Canadian aerospace and transportation company Bombardier Inc. sign a memorandum of understanding (MoU) for a monorail project, Invest-Gate reports. Under the MoU, the Canadian firm will prepare a study for the establishment of the monorail that will link Nasr City with the New Administrative Capital, passing through New Cairo.
prices starting from AED 1.3mn, the Alandalus townhouses are positioned within Dubai’s mid-market luxury segment. Townhouses in the first two phases of the project were sold out within three hours, with plans to launch the third phase later this year.
DAMAC LAUNCHES AURUM VILLAS Dubai-based property developer, DAMAC Properties, has launched Aurum Villas at DAMAC Maison Royale the Distinction, Downtown Dubai last month, Invest-Gate reports. Located in international golf community AKOYA Oxygen, the project is a collection of modern homes, bringing the golfing lifestyle to their clients including a championship-standard course a pro shop, a state-of-the-art clubhouse, and world-class dining facilities. DAMAC is offering 1 kilogram of
gold with the purchase of every villa. Furthermore, DAMAC has offered its potential clients 60% of the price per unit to be paid upon completion, as part of its Ramadan special promotion.
DUBAI TO SEE MIDDLE EAST’S LARGEST SOFITEL HOTEL IN 2019 AccorHotels luxury brand, Sofitel, in collaboration with development partner, MKM Commercial Holdings, unveils its largest real estate project in the Middle East, Sofitel Dubai Wafi, Invest-Gate reports. Located in Dubai, Sofitel Dubai Wafi is scheduled for inauguration in 2019, according to a statement. The new property comprises 501 luxury guestrooms inclusive of 86 suites ranging in size from 55 to 625 square meters, as well as, 97 studios, one, two, and three-bedroom serviced residences. The hotel provides business travelers access to 10 meeting rooms in addition to a 1,115-square-meter ballroom.
SAMCRETE POSTS HIGHER PROFITS IN Q1 Egyptian construction and development company Samcrete Egypt Engineers and Contractors posts a 2820% year-on-year rise in its standalone profits in the first quarter of 2017, Invest-Gate reports. Standalone profits reached EGP 18.19 mn in the three-month period ending on March 31, compared to EGP 622,900 in the prior-year period.
Venue
Sidi Abdel Rahman
The company’s activity revenues reached EGP 490.2 mn in Q1-17 compared to EGP 213 mn a year earlier.
DUBAI’S AZIZI DEVELOPMENTS RELEASES NEW RESIDENTIAL PROJECT Dubai’s property developer Azizi Developments unveils its second residential building in Dubai Healthcare City, following the success of Azizi Aliyah, Invest-Gate reports. Azizi launched its Farhad Azizi project that features 396 studios, 218 one-bedroom apartments and 20 two-bedroom flats. Set for completion by the second quarter of 2019, the project spans across a total construction area of 728,715 square feet. The residence also comprises outdoor
sports facilities, community retail centre, common areas, landscaped gardens, schools, private pool, spa, and gym.
EMAAR TO OPERATE JABAL OMAR’S MECCA HOTEL IN 2019
DUBAI PROPERTIES BEGINS WORK ON MARASI BUSINESS BAY MARINA UAE’s real estate developer Dubai Properties breaks ground on newest marina worth AED 1 bn in Dubai, Invest-Gate reports. The company started work on the new Marasi Business Bay Marina, scheduled for completion in the third quarter of 2017. Launched by Dubai Holding and Dubai
Bombardier will conduct feasibility studies including estimated ticket prices and the monorail’s initial route, in coordination with the Ministry of Transportation which will provide all the needed data about the site’s status, existing infrastructure along the monorail’s route, and the number of passengers which may reach 1.5 mn, NUCA Vice Chairman Mazin Hassan says.
Properties Group in May 2016, the new marina is going well on track as scheduled. The first phase of the marina will comprise 157 berths with size varying from eight to 35 meters, including essential facilities for boat owners, including potable water, power supply, drainage and sewage in line with the highest international standards.
12 | INVEST.GATE | July 2017 - ISSUE 04
UAE-based Emaar Hospitality Group’s hotel brand, Address Hotels and Resorts, signs a deal with Jabal Omar Development Company (JODC) to operate a new hospitality project in Mecca, Saudi Arabia, Invest-Gate reports. Address Hotels and Resorts will manage Jabal Omar Address Makkah to meet the growing need for luxury accommodation. The hotel will have 1,490 rooms and suites including units available for freehold sale. Scheduled for opening in 2019 near the Grand Mosque, the project is two
identical towers that will be linked by an interconnecting bridge.
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TOP 8 BEACH DESTINATIONS IN EGYPT SUNKEN CITY IN SAHL HASHEEH
EL MAHMEYA IN HURGHADA
A breathtaking bay on the Red Sea with stunning scenery, an integrated night life, and snorkeling adventures in an underwater temple makes this one hell of a vacation.
Embark on your private boat through crystal blue waters to a secluded island, El Mahmeya, or the “Egyptian Caribbean”. Restaurants, music, and sun-baked fun await the eager traveler.
AGIBA BEACH IN MARSA MATROUH
ISLAND OF THE PHAROAH IN TABA
Cradled in a yellow stone valley on the Mediterranean, Agiba beach offers a day of sun-filled bliss in a soul soothing shade of turquoise you’ve never seen before.
WADI QULAAN IN MARSA ALAM
SHARM EL NAGA BAY This holiday-maker’s delight boasts maintained marine ecosystems, with some of the best Red Sea dive spots just walking distance from the shore.
This natural reserve provides an escape from the touristic masses. Serene beaches unfurl in the embrace of beautiful mountains that you can hike through to see some rare Egyptian wildlife.
RAS SHITAN IN NUWEIBAA
This geographically strategic location provides your typical beach fun, as well as the chance to visit a -1,000 year-old fortress on its own island.
SWANLAKE NORTH COAST: WHERE SUMMER MEMORIES ARE WAITING TO HAPPEN
ABU GALOUM IN DAHAB
Pure, unperturbed holiday ecstasy. Relax on the beach, swim to nearby islands, discover gorgeous underwater ravines pulsing with rainbow -colored creatures.
With 400 sq km containing over 200 species of various fish and plants, it would take days to completely experience this slice of paradise.
INFRASTRUCTURAL ACHIEVEMENTS IN THE NORTH COAST since the establishment of TDA until December 2016
SEWAGE
ELECTRICITY
No. of Stations
Station Capacity m3\day
No. of Stations
No. of Generators
4
2,325
2
6
WATER
Generator Transformer No. of Capacity per Capacity per Transformers megawatt megawatt
8
6
9.5
No. of Stations
Station Capacity m3\day
4
2,800
THE GOVERNMENTAL PROJECTS IN NORTH COAST EL DABAA CITY No.of Units 2,203
NEW EL ALAMEIN CITY
No. of Communications Networks 1
From the City to the Sea
No. of Water Networks 1
No. of Electrical Networks 7
No of First Phase Units 10,000
Total Area 60 km
TOURIST AND HOTEL CAPACITIES IN THE NORTH COAST
HOTEL CAPACITY
TOURIST HOUSING CAPACITY
Initial Cost EGP 3bn
Total Area 48,000 acres
No.of Residents 17,336
I
magine the serenity of white sandy beaches and glittering vistas of crystal blue sea. Imagine the lushness of tropical landscapes with sparkling lagoons and undulating green. Picture the breathtaking luxury of the Far East a few hours away from home, an exclusive community where your family will unwind in the privacy of like-minded neighbors and friends. This is the promise of SwanLake North Coast, a luxurious new beach destination in Egypt to rival any world-class resort.
Planned
Completed
Under Construction
1,644
1,635
9
No of First Phase Residents 400,000
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WHICH INSTALMENT PLAN DO YOU PREFER WHEN BUYING A HOME?
37% 2,219
1,321
18 %
898 5 years
14 | INVEST.GATE | July 2017 - ISSUE 04
37%
7 years
8% 10 years
Located on the Alexandria/Marsa Matrouh road, SwanLake North Coast is merely a three-hour drive from Cairo making it the perfect weekend destination as well as an idyllic setting for longer retreats. As part of government plans to improve the national transportation network, Hassan Allam Construction, Hassan Allam Properties sister company, is currently building the new Cairo-Alamein highway. This national road project will run in close proximity to the SwanLake North Coast and promises to shorten travel times further. The Beach At SwanLake North Coast, the tropical landscaping cascades down in verdant waves of crystal blue towards a brilliant stretch of white sandy beaches. Here, overlooking the azure waters of the Mediterranean Sea, luxury cabanas dot the edges of the pristine sand against a backdrop of sparkling blue. The beach is the perfect setting for a family day with a range of kids’ activities, sports facilities, a beach restaurant at the water’s edge. A network of walkways for joggers and cyclists allows residents and visitors to explore the full reach of SwanLake North Coast’s magnificent seafront. Crystal Lagoons
More
At the heart of SwanLake North Coast lies three large and spectacular seawater lagoons covering in total over 10 acres and surrounded by a 2km stretch of white sand. Through this network of translucent lagoons, the
Crystal lagoons of the Mediterranean are carried into the landscaping of SwanLake North Coast, offering homeowners throughout the resort unimpeded views of water and easy access to the beach. The sensational lagoons bring the seafront to the residents’ doorstep and provide a safe and idyllic setting for their families to unwind. Tropical Landscape Design Modeled on the world famous beach resorts of the Far East, SwanLake North Coast offers owners a tropical landscape of luxurious green. Thick forests of palm trees line the edges of splendid seawater lagoons that arch into exclusive and secluded beach coves, stretching throughout SwanLake North Coast. The rich leafy foliage and towering palms mark the contours of this paradise of green. Fully-finished Units For the busy city dweller, a break from home should not mean leaving the luxuries of home behind. Interior Designer, Mohamed Noaman, has created a bespoke range of interiors in a modern contemporary style to match the architecture of the project for our exclusive holiday homes and chalets offering the homeowners all the comforts and amenities of home in a breathtaking setting by the sea. All properties are delivered with fully-finished interiors, kitchen cabinets and fully-fitted bathrooms, so all homeowners have to do is move in. Contemporary, Asian-inspired Architecture Hassan Allam Properties works with internationallyreputed master planners and architecture design firms to achieve the world–class living experience that is the trademark of its developments. SwanLake North Coast is no exception: designed by world-renowned JZMK Partners, the project has been created in an architectural style that emphasizes privacy and an exclusive way of life. The modern open-floor plan with large expanses of glass maximizes potential views and effortlessly combines indoor and outdoor living spaces.
A Dedicated Clubhouse at Your Service At the heart of the resort is a state-of-the-art clubhouse nestling along the edges of spectacular seawater lagoon. With its panoramic views of crystal-blue water, this is a hub for families and friends. It offers a fullyequipped gym, a luxury-dining outlet, a fun kids’ area and several convenience stores for that last minute purchase. A large and luxurious ‘lap- pool’ features a horizon edge that stretches out towards the lagoon, offering breathtaking vistas that appear to merge the surface of the pool with the crystal lagoon beyond. Boutique Hotel Nestling in the heart of the tropical landscape, with dramatic views of the Mediterranean, Hassan Allam Properties has created an exclusive destination that offers six-star hotel accommodation and catering facilities. Designed in the Asian/contemporary architectural style of the resort, the company’s luxury boutique hotel completes the SwanLake North Coast experience, combining the elegance of the Far East with the profound tranquility of Egypt’s northern coastline. Sports Facilities A healthy and active lifestyle is an essential ingredient in any great vacation and Hassan Allam Properties has created a world-class sporting complex to accommodate even the most energetic of holidaymakers. SwanLake North Coast offers a comprehensive range of sports facilities: from a cutting edge gym located at the clubhouse to state-ofthe-art outdoor facilities that include tennis, paddle tennis courts and a football pitch for those heated afternoon matches. For homeowners not in the mood for the rough and tumble of outdoor sports, the company offers a full range of classes at the gym: here homeowners can practice yoga, Pilates and more, in a private and idyllic setting. Delivery: First delivery of phase 1 units is June 2018. THE VOICE OF REAL ESTATE | 15
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Sahel Destination Analysis
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Sahel Overview
Weather in Sahel
Overview
Seasonality
Sahel is a favored destination for Egyptians and tourists. A gorgeous seaside with upscale tourist villages. The weather is usually milder than the Red Sea in summer, with plenty of luxury compounds, great for escaping the more noisy areas. The Mediterranean Sea permits a great deal of water sports and relaxation on the shores. The more iconic locations in Sahel is the well-known resort town of Marina, often favored by the Egyptian elite. Sahel is considered one of the most popular destinations for the A class summer travelers to enjoy their vacation in a high community level
Sahel is considered a seasonal destination given its weather conditions… Al Dabaa Road 286 km 3hrs 15min Cairo/Sahel
(Through Wady Al Natrun)
253 km 3hrs 57min
…and since profits for developers is affected by the seasonality factor, prices increase significantly to compensate their investment cost…
Cairo
120 65K+ 260K+ 155+ 85K+ 340K+ Units
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Areas in High Demand
Capita
B
Almaza Bay
B+
Ras El Hekma Sidi Abdel Rahman
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60 50 40
Top 10 Developers
Sham El- Nessim Holiday
30 20 10 Jan
Feb Mar Apr May Jun
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0
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Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16
↓ Rent Model
↑ Selling Model
Land owners (government or private) tend to sell lands in Sahel to private developers at a high price given the uniqueness of the idea of ‘owning’ a beach front land…
…which drive developers to eliminate the idea of renting the developed properties given the long payback period they will encounter post paying significant investment costs…
…;therefore, developers activate the selling model over the rent approach at high prices to balance their cash flow against the acquisition price they closed at
↑ Demand
↑ Unit Prices
High demand from B class community on the destination searching for any property within their means
Town House
Chalet
2.5
5.5
Result Stay at relatives’ houses
(EGP Million)
Standalone Villa
Crash at friends’ places
9.5
One day trip
Hospitality / Rental Properties of All Properties Available
2%
S
A
H
E
L
90% G
O
U
Governmental Sector Obligations
A
Development Projects
Al Alamein A+
Eid El-Fetr Long Weekend
↑ Land Prices
…creating shortage in supply of “affordable” units available for sale, which leave the major community (B class) shorthanded since most target clientele in coastal resorts are A class community…
…leading to, despite high demand, a shortage in units available for rent given the low publicity on rental units and limit in supply of hospitality units given that most properties are 5 stars hotels…
Clientele Breakdown
Sidi Heneish
Fouka Bay
35 30 25 20 15 10 5 0
↓ Supply
2010
Projects
↑ Prices
Flow of Sahel Goers in the Season Season When Eid is in the Summer Season when Eid is in the Winter
Mean Total Rainfall (mm) Mean Daily Minimum Temperature (°C) Mean Daily Maximum Temperature (°C)
All Year Round
…;therefore, the private and public sector have an obligation to prepare Sahel to be an all year round destination in order to utilize all area resources through implementing diversified projects to accommodate for that change…
Agricultural
N
A
100% S
H
A
R
M
Private Sector Obligations
Removal of Landmines
Development of Services Projects Hotels & Serviced Apartments
Shore Protection Against Erosion
Medical
Creating Job Opportunities
Educational
Industrial
(Schools & Universities)
Transportation Commercial Power Generation
Seawater Desalination
Infrastructure
Entertainment
Social Housing Projects
Admin
The destination has not been considered as a first home yet and not expected to be, in the near future at least, given the rare job opportunities, weather in the winter, shortage in services (such as hospitals, schools, universities) in the area. This leads to limited investment opportunities other than the summer season unless the government and the private sector contribute to make a solid change in the area
For more details, please contact | Ashraf Warida, CEO Email | ashraf.warida@cb-egypt.com © Coldwell Banker Commercial Advantage 2017
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Tel | +2010 2555 6673
Website | www.cb-egypt.com
© Coldwell Banker Commercial Advantage 2017
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CITYSTARS ALSAHEL: Extravagant Venue for North Coast Holidaymakers, Honeymooners The Northern Coast of Egypt has become one of the hottest spots for domestic and international tourism development in Egypt lying between Alexandria and Marsa Matrouh. It is about 1 hour and 30 minutes away from Alexandria, and about 3 hours from Cairo. It is six kilometers away from exit number 3 of Fouka new road, 90 kilometers from Marina Alalamein and 90 kilometers from Matrouh. It is the summer destination for Egyptians and international tourists as well because of its ideal summer weather and captivating landscapes. CityStars Alsahel is an extravagant venue for North Coast holidaymakers and an ultimate fun escape for couples and honeymooners. The lush greenery and scenic landscaping creates a spectacular atmosphere for those who would like to laze by the beach, swim in the Crystal sea water Lagoons, ride horses and enjoy all kinds of sports or just like to exercise in a health club or party all night. CityStars Alsahel will include an exclusive residential complex, hotels, blue lagoons strategically distributed within the project, and recreational facilities, especially designed for the seasonal nature of the area. What is special about CityStars Alsahel is its Neymar Lagoon and the branded Neymar Floating Chalet. Brazilian football player Neymar will be ARCO’s brand ambassador and face of ARCO for the coming two years. La Voile Rouge, the entertainment area, the commercial center and three of the world’s most renowned hotel chains: Fairmont, Raffles and Swissotel are also some of the distinguished features of the venue. Spanning an area of 3,100,000 square meters, the major project hosts a wide variety of villas, chalets and apartments. It was launched in 2016 at a total investment worth EGP 3.5 bn. The project offers 48-meter cabanas, floating chalets spanning an area of 118 to 134 meters, twin houses of 264 meters, twin chalets of areas starting from 193 to 134 meters and standalone villas of areas ranging between 297 and 383 meters. The beach front stretches over an area of 1,500 meters.
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How do you view the current status of the Egyptian economy? And how do you view the real estate investment climate as well? We passed through a very difficult time from political instability to drastic economic changes. As we deal with international and local investors, we remain sensitive about the country’s overall situation. From 2011 up until recently, the investment climate has been hindered. It was only in the last couple of years that Egypt has started to gain political stability and has set strategically a proper reform plan in all sectors. Finally with this instability coming to end, we were faced with some market problems like having two entirely different values of the foreign currency in the market, including the shortage of foreign currency and banks’ pricing versus that of the black market. Now, for the first time, we have actually addressed all the issues and problems and are now working on fixing them. We have finally acknowledged the real situation and are addressing it accordingly. From an investment perspective, I believe we are in a very good place. At least, we have declared our problems! In front of the entire world, Egypt presents a true picture of its current markets, with all dilemmas, and the government’s plan to overcome them. Whether we achieve our goals or not, this is an entirely different story. But in general, today, the investment appetite towards Egypt is very positive. We believe that a lot of money will be poured into this country by the end of 2017.
With Inertia turning 10 this year, how did you manage to position Inertia amongst the biggest names in the real estate market today? In those ten years, we faced everything starting with the world financial crisis, then the two uprisings in Egypt. Let me demonstrate how it all happened… The real estate industry in Egypt is based on ‘deep pockets’. If we examine the identity of the key players in the market, we find those big local investors, who have decided to pour in capital into developing companies, or 50 to70 year old contracting companies, accumulating their profits and equity over the years and then decided to become developers. This sector, I believe, had no room for entrepreneurs. And this is where Inertia comes into place.
What do you mean exactly? Hussein Rifai and I come from a consultancy background on public and private projects. Throughout our careers, we have acknowledged some gaps in the business and it became our passion to overcome them. We started with almost no capital and looked into the main challenges that developers are always faced with, which include land scarcity and funds. Banks in Egypt will never fund startups. We had to think outside of the box, creatively, to overcome those two major obstacles in order to play a vital role in this sector. I believe that this is Inertia’s edge unlike any other. We always remain persistent to remove any bumps on the way.
Inertia presents a different business model, how did you manage to overcome land scarcity and funding at the beginning? With very low capital, we outsourced solutions to be able to bring the dream to reality. Of course, our
INERTIA ELEVATES EGYPT’S REAL ESTATE MARKET
government has limited resources and therefore, the land plots offered are not ready for immediate development given their lack of infrastructural preparations. So, they offer land plots either through privatization or open lotteries, creating tough competition for startups amongst the biggest key players in the market. So, our chances of buying a land to begin a project were zero. However, my partner and I found two ways to overcome this issue. First, we decided to introduce the ‘sub-development concept’ to the Egyptian market. Today, the market has mega developers with huge land banks and development plans exceeding a hundred years to say the least. Mind you, this over-100-year-old business model does not exist elsewhere around the world! So, we decided to approach the master developers by becoming a sub-developer in their longschemed projects whether through partnership or buying a part of their land plots at convenient terms. This concept was recognized by SODIC in its Beverly Hills residential project back in 2007. And we managed to sell our concept to Orascom twice in its El-Gouna project, where we now have G Cribs. It was, of course tough, in the beginning to sell this renovated concept especially to Orascom, given that Orascom was the sole developer of El-Gouna and no other developer was to set foot there. Our key selling argument was, “Orascom has managed to develop 18% of the project in 20 years. So, there is no way you will reach its completion in 100 years as planned.” The sub-development concept presents a win-win situation for developers. If we take the Orascom case, for example, the company would complete its project at a faster rate and would gain revenues from the Inertia product. In addition, the land value would increase.
FIRST, WE DECIDED TO INTRODUCE THE ‘SUB-DEVELOPMENT CONCEPT’ TO THE EGYPTIAN MARKET. TODAY, THE MARKET HAS MEGA DEVELOPERS WITH HUGE LAND BANKS AND DEVELOPMENT PLANS EXCEEDING A HUNDRED YEARS TO SAY THE LEAST.
BY FARAH MONTASSER
D
riven by pioneering entrepreneurs, Egypt’s real estate developer Inertia has achieved exemplary standing amongst the country’s real estate giants as it celebrates its tenth anniversary. Invest-Gate sits with Inertia’s masterminds Hussein Rifai and Ahmed El-Adawy to shed light on the rise of Inertia and its new take on entrepreneurship as part of its real estate activities. Giving the property sector an interestingly new approach, El-Adawy demonstrates Inertia’s role in real estate development and outlines the company’s ambitious goals.
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To us, Inertia would benefit from the Orascom name. We were the first to introduce such a concept and started implementing our sub-development project, G Cribs, back in 2009. Today, El-Gouna has five other sub-developers and Orascom’s main revenue stream heavily relies on the sub-development projects more than its own residential developments. I believe that such a concept turned more success to El-Gouna. Over the past six or seven years, El-Gouna has become alive and an all-year-round destination especially to the youth, who could not previously afford Orascom’s USD 4,000-per-meter unit. Today, they have bought our USD1,500-per-meter unit at G Cribs. We managed to attract this new age bracket as homeowner instead of having the youth traveling to El-Gouna for a short stay. After obtaining land plots, another solution we sought was to approach those private (unrelated to real estate) entities or individuals, who have owned massive land plots for over 20 to 30 years (worth EGP 700 to 800mn today). No developer or businessman can pay this amount of money to buy such lands because of the lack of liquidity and the infeasibility in our market. So, the solution was for us to partner with a developer over revenues of a certain project, according to its development plan. Yet again, it turned out to be a win-win situation because developers generate revenues and internal rate of return (IRR), whereas for Inertia, it is a land bank without liability and installed payments. Furthermore, costs and initial project funds are tremendously cut for Inertia as a developer at the initial phase of project development. We continue to follow this method to secure a profound land bank throughout our ongoing nine projects and at a very cheap cost.
Jefaira’s health and wellness platform is to include many rehabilitation centers, cosmetic surgery facilities, and retirement homes as well. We aim to provide the medical procedures that are not covered by most insurance companies across Europe and the USA, so that we have a medical tourism flow and also attract foreign investors to our destination. We are currently working on those platforms that define Jefaira, making it exceptional and will also cater to the North Coast’s goal of becoming an allyear-round destination.
What is the current status of Jefaira? We launched our first residential phase and will continue to do so until the end of August. Then, we will move onto the following phases. Throughout all launching phases, we are to remain very much focused on supplying the non-residential components. A lot of homework is being done now to have our platforms ready as we launch each residential phase. We also focus on utilities and have joined forces with KarmSolar for Jefaira to be 100% solar energy dependent. This is to be reached by the end of the project. We are currently promoting Jefaira locally and plan to promote it across the MENA region and Europe very soon.
What about funding? We sought equity finance instead of debt finance, as the bank systems in Egypt cannot fund startups. At the same time, we wanted to keep Inertia shareholding body as is without an investor’s interference. So, we had to separate between the investment vehicle and the Inertia identity. We put those new investments into special purpose vehicles (SPVs) and it is those SPVs that acquire Inertia as a developer. Sometimes, we fund the capital of those SPVs to partner in some projects and in other times, it only relies on external investors with Inertia being only the developer. At some point, those SVPs were owned entirely by Inertia. It is a flexible system that protects all investments of any sorts and has also given Inertia its presence in the market, given the limited resources we had back then. Those SPVs help investors select between the projects they want to invest in with clear exists and revenue generating. This, too, continues to be our ongoing strategy and we have attracted local and foreign investors from several markets and not just real estate. We have managed to succeed and reach where we are today following this method without the outdated banking systems of Egypt. I admit that the political unrest of 2011 played a crucial role in our favor. We gambled with our presence in the market when most companies either fled or put their projects on hold. We decided to work and it paid off.
As for Jefaira, does it follow the same strategy? Is it also a sub-development project? Inertia is the master developer of the 5.5-millionsquare-meter Jefaira project and the landlord is AK, an Egyptian investment company. 22 | INVEST.GATE | July 2017 - ISSUE 04
How do you evaluate the development in the North Coast? Will it be open all year round? Or will it continue to cater to the locals during the summer season? We bet that we will make the North Coast open to the outside world in the near future. Our vision is to have a Jefaira City featuring communal living and not just a summer residential resort like the rest of them. To change the identity of the North Coast, we need to look beyond the small summer resorts and compounds of 250 units maximum. The new North Coast should be a fully livable city and only big scale projects like the government’s New ElAlamein City and Emaar’s 6.5-million-square-meter Marassi can make this dream come true. I hope New El-Alamein City has a clear vision and a modern plan to be followed. It is those large-scale projects that will transform the small seasonal resorts of the North Coast that we know of into new urban communities, featuring livelihood amenities and granting access to the North Coast all-year round. Putting that into perspective, Inertia sought the purchase of a- 5.5 million- square-meter- land plot to have a complete project. We are very optimistic about the North Coast as a destination.
So what makes Jefaira so special? And how can it contribute to the development of the North Coast? Jefaira is to be a city on its own. On its 5.5 million square-meter span, Jefaira will include 10 residential neighborhoods. Our ultimate goal is to have 25%-30% of its residents actually living in
Jefaira permanently. As for the rest, we aim to make them stretch their summer season to include a five to six month minimum stay.
How do you aim to achieve this? We are working on Jefaira’s ‘non-residential components’. In other words, giving our residents guarantees to reside in Jefaira all-year long, given the accessibility of amenities and services provided. Our non-residential components that are in constant research include the following; an educational platform (university and a boarding school), a sports platform (a sports academy, team camping, and training sites), a hospitality and leisure platform (hotels and an international marina), and last but not least a health and wellness platform, which mainly caters to the medical and therapeutic tourism sector.
WE BET THAT WE WILL MAKE THE NORTH COAST OPEN TO THE OUTSIDE WORLD IN THE NEAR FUTURE. OUR VISION IS TO HAVE A JEFAIRA CITY FEATURING COMMUNAL LIVING AND NOT JUST A SUMMER RESIDENTIAL RESORT LIKE THE REST OF THEM
So is Jefaira an eco-friendly project? This is our aim and we are working hard on it. Aside from our deal with KarmSolar, we are working with other companies on desalinating seawater to be used for water supply and landscaping. Later on, we will include fishing farms and agriculture based on desalinated water, too. As I said, if we are to put Egypt’s North Coast on the world tourism map, we need to build new cities from scratch and create urban communities. For that we have to focus on all aspects of life from basic living needs to industry, farming, agriculture, and leisure.
So this is somewhat equivalent to the New El-Alamein City?
WE ARE WORKING ON JEFAIRA’S ‘NON-RESIDENTIAL COMPONENTS’. IN OTHER WORDS, GIVING OUR RESIDENTS GUARANTEES TO RESIDE IN JEFAIRA ALL YEAR LONG, GIVEN THE ACCESSIBILITY OF AMENITIES AND SERVICES PROVIDED
Yes, this is our plan and we believe it is doable. Egypt’s North Coast is worth a polish to give it the status and value it actually deserves, following years of improper planning.
About the Marina, some other developers aim to have an international marina/port, but remain doubtful? How is Inertia going to achieve that? We started collaborating with governmental entities only four months ago, mainly with the governorate of Marsa Matrouh, and so far they are very
cooperative. We know that the path to obtain an international marina/port is different and somewhat difficult, but we trust that we will have all on board with us in achieving the new North Coast at the end. The marina is not in the first three to four phases, but if we reach an agreement and approval from the government, which we are always working on, by all means we will put it a priority sooner than we initially planned.
You mentioned working with entrepreneurs like KarmSolar, how crucial is it for Inertia to collaborate and encourage entrepreneurs? By nature, Inertia deals with a lot of high-caliber companies across all fields from solar technology, architecture design, to technological support and solutions, and so forth. The many we collaborate with are young entrepreneurs. We have been selected back in 2015 to join Endeavor, a worldwide organization based in Latin America bringing young and successful entrepreneurs from around the world together, aiming at enhancing the international entrepreneurs’ community. As members, we receive of course benefits from this international entity and we pay back by supporting other startup businesses.
What advice do you give them? In Egypt, the key factor is persistence. There is no other way to reach your goal, but to be persistent and aim for your goal and never take no for an answer. There were many challenges throughout Inertia’s first ten years, but we managed to overcome them. As we move forward setting higher goals, we know that we will face more difficulties along the way. However, we always stay focused and are determined, knowing that we will achieve what we want at the end. Yes, there are many obstacles given the current local conditions of the country today, but there is always room for opportunity and a persistent entrepreneur should seek those opportunities.
Are you hopeful? Yes, we are very much… the investment environment today in Egypt is very promising. I see an amazing future given the high demand on real estate.
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Jefaira is stretched over 5.5 million square meters, with 10 neighborhoods, overlooking the enigmatic shores of
the Mediterranean on the Egyptian North Coast. Every unit within Jefaira will have access to the Aeolian salty sea breeze driving between the wide causeways leading to the promenade and marina, where eyes will meet the endless deep azure of 3.6 kilometers of enchanting Mediterranean coast. Visualise a Mediterranean escape that you would never have to leave, a blissful getaway that can become a lifestyle, a home. Strategically located on the breath-taking Mediterranean North Coast, and equipped with a variety of services and amenities, Jefaira provides an upscale locale to stay in all-year round.
Days in Jefaira can be spent walking placidly along its shores, or invested in a myriad of water activities. Residences in Jefaira are inspired by the Mediterranean islands’ architecture, that aim to merge visual aesthetics with their natural surroundings. Living in this Elysian escapade permanently is a reality in Jefaira, as the premises provides educational services, institutes, specialised medical services and medical clinics, community enrichment facilities, and business facilities such as convention centres, a fully equipped sports academy, and a downtown area that is at the epicentre of all activities.
Winding promenades will lace between cool and neutral colored units and their clean design will provide the privacy that all residents crave.
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NORTH COAST CONTINUOUSLY ACHIEVES
REMARKABLE COMMERCIAL GROWTH BY FATMA KHALED
sophistication of the buyers who look to extend either their stay or rental returns from their investment. To attract these buyers, developers need to look beyond the limited retail and F&B offerings, creating pull factors. These include boarding schools, hospitals and clinics, educational facilities, retirement communities, and rehabilitation centers,” Helal says. Despite the strength of retail and other types of commercial behaviors in the region, particularly with newer developments such as the likes of Marassi, the region is lacking in cultural activities. Marassi features distinctive retail and entertainment venues tailored specifically for high-end users, according to their official website. The project includes M Porium, a 5,000 square meter plaza containing 15 eateries, services, retail outlets, and a Gold clubhouse, hosting concerts and events during the peak season. Art galleries, coffee shops, and nightlife spots are also found onsite. 6ix Degrees remains among the popular destinations, offering themed nights at Hacienda Bay. Summer 2017 is expected to witness the inauguration
Given that the North Coast is an established vacation destination, we do not see many opportunities for commercial activities outside the lifestyle community, retail and commercial offerings
of a golf course at Hacienda Bay. Meanwhile, the Golf Porto Marina offers the only 18-hole Golf Course in the North Coast. “Given that the North Coast is an established vacation destination, we do not see many opportunities for commercial activities outside the lifestyle community, retail and commercial offerings,” said Helal. In efforts to expand the current clientele base at the North Coast, Colliers recommends capitalizing on fitness camps and health retreats. Expansion of retail and commercial activities requires certain procedures to be carried out, according to Essam Hafez, Retail Country Manager of Al-Futtaim Group. “In my opinion, in order to develop malls in cities
there has to be feasibility and viability to apply retail projects. There are factors to consider that we need to guarantee such as whether commodities are permitted or not. If there is optimism and commitment towards introducing the retail market in such areas then it is definitely manageable,” Hafez tells Invest-Gate. Higher domestic and international occupancy rates could be witnessed if commercial activities are expanded throughout the North Coast region, based on experts’ opinions, as many Egyptians already continue to flee every summer to the cool breeze in the North Coast.
Photo courtesy of Gaby’s Telal
W
hile the North Coast attracts heavy volumes of Egyptian clientele every summer, particularly with the ongoing growth in commercial activities, a lot of these types of projects might not be attractive to foreign tourists. Invest-Gate explores the transformation of commercial activities in the North Coast and reveals the recent market trends based on expert opinion. “The coastal area is one of the popular weekend places for domestic tourists during the year; however, the retail landscape is limited in developments,’ says Colliers International Egypt Director Karim Helal. “There are little or no standalone retail outlets outside residential compounds,” he tells Invest-Gate, assessing the current commercial platform in the North Coast areas. Running along the Mediterranean coastline between Alexandria and Marsa Matrouh, the North Coast features iconic beaches and restaurants but less water sports or leisure activities in comparison to other popular destinations, according to a Colliers International report. International inflows remain reportedly due to the scarcity of activities of Bedouin origins, that including culturally performed rituals of the community living in the desert, safaris, camping etc., and hotels despite continued popularity of commercial destinations to Egyptians. (needs to be rephrased) Helal says that the North Coast market remains undersupplied despite holding the opportunity of introducing new real estate products that can affect occupancy rates and price premiums.
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“The area lacks the general community infrastructure such as schools, healthcare facilities, shopping malls, and other day-to-day social/ family entertainment facilities,” he adds. The government set out a development plan in 1982 to develop touristic projects in the North West Coast, which included the integration of agriculture and industrial development as well as exploring the region’s natural resources. Marakia Village was among the first touristic villages developed in the North Coast in 1991. Constructed by the Egyptian government, the project included villas and chalets, artificial lakes, lagoons, water-based activities, leisure centers, in addition to other facilities and services. Marina Al-Alamein was also among the first projects constructed in the coastal region, featuring Mediterranean Cabanas, fishponds, fishing activities, camping area, and a marina. Heavy flows of Egyptian vacationers overcrowded Alexandria, Agamy and other North Coast destinations over time. Al-Alamein and Ras El Hekma further West remain popular. Egyptians interested in purchasing a second home in the North Coast are generally aged between 35 and 45 years of age. This clientele usually provide a down payment of EGP 150,000 and are often offered flexible payment plans, according to Colliers International. Purchases in the North Coast are often made by clientele to serve the dual purpose of offering an investment against currency decline as well as providing the leisure and entertainment facilities of
Moreover, as the market has developed, so has the sophistication of the buyers who look to extend either their stay or rental returns from their investment. To attract these buyers, developers need to look beyond the limited retail and F&B offerings, creating pull factors. These include boarding schools, hospitals and clinics, educational facilities, retirement communities, and rehabilitation centers, first home developments. Helal says that integrating entertainment facilities with residential communities will bring about high returns on investment. “Moreover, as the market has developed, so has the THE VOICE OF REAL ESTATE | 29
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FUTURE PROJECTS ACROSS EGYPT’S
NORTH COAST HOPEFUL TO BOOST TOURISM BY NAYROUZ TALAAT AND JULIAN NABIL
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lthough the hospitality and tourism sectors across Egypt’s North Coast are seen at low rates, given the limited amount of hotels and tourism activities, experts believe that there are a host of new major projects in the pipeline expected to increase the region’s hotel supply and cater to tourists’ needs. Invest-Gate explores the hospitality and tourism sectors in the North Coast. “The numbers of foreign tourists visiting the North Coast are low, compared to other tourist destinations located in the Red Sea such as Hurghada, Sharm El-Sheikh, and Dahab but real estate developers are pinning hopes on the country’s new developmental projects that they say will help the tourism and hospitality sectors in the area flourish all year long,” CEO of Sakan Mohamed Tharwat, a real estate consultancy tells Invest-Gate. The government is now paying due attention to the North Coast region as it has given the go-ahead for major projects such as El-Dabaa Nuclear Plant, New El-Alamein City, El-Alamein International Airport, as well as, paving new roads to link those areas to the capital. According to local media, there are an estimated number of 3,000 hotel rooms along the North Coast, compared to around 62,000 rooms in South Sinai. Experts say that the North Coast should have a hotel capacity of at least 20,000 rooms if the area is willing to attract foreign visitors at the same rate of Red Sea destinations like Sharm el-Sheikh and Hurghada. Future Projects One of the major projects in the pipeline in the North Coast is Swiss-Belresort Marseilia Beach 4, which is owned by Marseilia Egyptian Gulf Real Estate Investment and managed by Swiss-Belhotel International (SBI). Located in Sidi Abd El-Rahman Bay, the 150 room hotel is scheduled for opening in 2020, according to SBI. Estimated at an initial cost of EGP 3bn, the New El Alamein City project developed in Marsa Matrouh will be an addition to the North Coast, with its first phase including a tourism development, a residential area, and associated facilities, according to the Ministry of Housing, Utilities and Urban Development. Hotel operator, AccorHotels, announced late last year the signing of management agreements with Egyptian real estate developer ARCO for four new hotels in the North Coast. Fairmont Fuka Bay is one of the projects, which will boast 250 rooms and 150 Fairmont-branded residences, with a plan to open in 2019. Scheduled for opening in 2022, Swissôtel Fuka Bay is yet another project that will offer 300 rooms and 200 branded residences. The third hotel is the 250-room Novotel El-Alamein City, which will overlook the Crystal Lagoons and set to debut in 2018. The hospitality sector will also be boosted by Hyde Park’s latest project, Coast 82, that
spans over 1 million square meters in the North Coast, with total investments worth EGP 12.5bn. The project will comprise around 500 villas and 600 chalets, in addition to a commercial space and a five-star hotel with a seafront extending 550 meters, according to Hyde Park Developments CEO Amin Serag. Challenges Speaking about the challenges, Sakan CEO Tharwat says that the North Coast area still lags behind in infrastructure projects. “However, if the government moves ahead with all developmental projects there, the situation will be brighter during both the summer and winter seasons,” he adds. For his part, Fathallah Fawzi, a real estate developer and expert, suggests that the government also offer more incentives to tourists in order to encourage them to visit the North Coast area. “Such incentives can include more competitive flight ticket prices, the establishment of more hotels and entertainment areas, as well as the increase of flights to the North Coast,” he tells Invest-Gate. Efforts to revive foreign tourism and prospects for growth In an attempt to support the hospitality sector and prevent further hotel closures, the government has taken a raft of measures over the past few months. This year, the government postponed the collection of outstanding hotel debts (such as taxes and utilities bills) until 2018, according to Londonbased research firm, BMI. Egypt’s plan to increase the visa on arrival fee to USD 60 back in March has also been postponed to early July. The government targets to attract over 1 million tourists from China by 2020, a movement to rely less on visitors from European markets like Russia and the UK, the report adds. In May, Marsa Matrouh welcomed the first charter flight with 116 Italian visitors on board, in addition to 137 Italian and 81 Ukrainian tourists in June, with a plan to increase the number of charter planes until October, Marsa Matrouh Governor Alaa Abu Zeid announced in a statement. The North Coast is served by four airports, in Alexandria, El-Alamein, Burj Al-Arab, and Marsa Matrouh. Countries such as Germany, Poland, and Turkey that previously imposed a travel ban to Egypt, following the Russian passenger jet crash in Sinai in late October 2015 have resumed their flights, except Russia, which is still in place, while Britain advises travel to Sharm El-Sheikh only. It seems that if the Egyptian government proceeds with its major developmental projects in the North Coast area, the tourism and hospitality map of this region would be remarkably improved thus attracting Egyptians and foreigners alike to the area.
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UNTAPPING POTENTIAL OF ECOTOURISM CAN SALVAGE EGYPT’S TOURISM INDUSTRY BY INVEST-GATE
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espite its maximal potential in terms of bankable natural resources, the concept of ecotourism in Egypt seems all but alien. The country still lags behind in adopting sustainable approaches in order to attract a different type of tourism to Egypt’s shores and valleys. Though many countries of similar economic standing -- such as India, Indonesia, South Africa, and a number of countries in South America -- have invested in diversifying their tourism revenues through the introduction of eco-lodges, protectorates, and other eco-conscious attractions, Egypt has yet to tap into its full potential in this regard. Nuweiba and Siwa stand out as the immediate, obvious choices of ecotourism hotspots, and while they have drawn a specific clientele over the last three decades, the growth of such tourism there has been somewhat arbitrary. Moreover, ecotourism in Egypt, which is mainly centered in the Sinai Peninsula, has been hit hardest by the continuous threats and incidents there. However, setting aside the recent setbacks that have struck the tourism industry as a whole, the few examples of ecotourism that did take off in Egypt
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managed to flourish over the past years, contrary to expectations. The Nuweiba Example Perhaps one of the most significant, if not the oldest, examples of an ecotourism venture in Egypt is Basata Village just north of the Port of Nuweiba in South Sinai. When it was launched in 1986, the idea of an eco-lodge or village was all but unheard of in Egypt, and the Nuweiba coastline was, similarly, all but empty. Seeking to create a new form of environmentallyconscious tourism, Sherif El-Ghamrawy, originally an engineer from Cairo, sought a back-to-basics approach to tourism, wherein self-service and waste reduction are the mottos that dictate the ethos behind the camp. When the village was launched 30 years ago, nobody imagined that it would herald the dawn of a boom in Nuweiba, as a tourism industry was born out of this simplified, back-to-basics approach. Oftentimes, it was either Cairenes or other citydwellers escaping to launch yet a new camp, or it was the indigenous bedouin population seeking to capitalize on this new trend. Despite the
presumptive tensions that have existed between the two different lifestyles that sought to cohabitate in the same land, a new model was able to emerge and harmonize with the surrounding landscape. Nowadays, the coast of Nuweiba is dotted with countless camps, and despite a major drop in numbers due to the tensions in the north, camps like Basata continue to draw tourists, both local and international. Maged El-Said took it one step further and established Habiba Camp and its environmental mainstay, an organic farm and learning center that seeks to revolutionize the lives of many, both locals and visitors alike. Built on the motto of “Synergizing Differences”, Habiba has adopted a large variety of different approaches and philosophies in order to make a lasting difference and revolutionise the way members of the local community goes about their day-to-day lives. “I was inspired by the bedouin lifestyle when I visited Sinai, and by the desire to counter the negative effect tourism had in terms of diminishing their way of life,” El-Said tells Invest Gate.
“Bedouins were attracted by the easy money opportunities provided by the tourism industry, but this was diminishing what attracted me to the area in the first place.” Furthermore, when the larger hotels came, there was no attempt to build an inclusive business model whereby the local population could also profit from the industry, which had a negative longterm effect on the community, according to El-Said. Habiba builds on the concept of sustainable development by providing the local population with the tools through which they can not only sustain a living, but also ensure profitability by introducing non-traditional agricultural methods that allow for growing food in the desert climate, without relying on the seasonal rains as bedouins normally do. By engaging the local community and providing agri-tourism as an alternative type of tourism, El-Said believes he can hedge against the regular shocks in the market, while maintaining profitability, both on a personal and a community level. His model aims to address food scarcity in the community, and in the meantime he has attracted volunteers -- both experts and amateurs -- from all over the world, some of whom remain at Habiba for months or years at a time. Investment Potential “Ecotourism is actually more profitable than traditional tourism, even if considered in purely economic terms,” contends Samy Solaiman, head of the Investors Association of Taba and Nuweiba. By targeting a different touristic segment that is seeking this form of tourism, a successful model can become profitable, as ecotourism “relies on materials that are far less costly, and guests seeking out this kind of tourism are not seeking technology [in their lodgings]. Therefore, we are conserving both costs and energy, in addition to conserving the environment, which has long-term benefits,” Solaiman says. The head of the association also believes that similar models to the one in Nuweiba can be replicated elsewhere, while avoiding some of the same problems encountered in the South Sinai area. “Egypt is full of great natural attractions, such as those in Siwa, Farafra, Fayoum, to name a few. The idea is to diversify the types of tourism in the country, which in turn will consolidate the industry and ensure growth,” Solaiman adds. Indeed, the Farafra Oasis, as well as other places such as Marsa Matrouh, could become prime spots for drawingtourists who are more likely to seek out a frills-free experience, in exchange for the opportunity to witness and contribute to the naturally-occurring attractions. Moreover, in the Siwa Oasis, a number of lodges, such are Adrere Amellal, have proven that a sustainable approach and a luxury experience are not necessarily antithetical, wherein five-star accommodation is offered with all the luxuries and comforts, but electricity is one luxury that guests discover they can afford to live without. They are provided instead with all-natural lighting and are encouraged to leave their phones and electronics at the door. Another example is Hawyet Siwa, an initiative built on environmental and social sustainability, run by Fares Hassanein, who works on documenting and researching the cultural heritage of the region. Solaiman further continues that other areas he mentioned present an opportunity to build on
the ecotourism prospects, without “repeating the same mistake that was made in Nuweiba, [which is] building five-star hotels next to camps and eco-lodges. Those are completely different types of tourism, and those who are seeking ecotourism lodges and camps are not going to be attracted by a five-star air-conditioned hotel.” Environmental Concerns Meanwhile, questions are raised over the long-term environmental cost of traditional tourism, and the long-term sustainability of certain touristic practices. One of the most environmentally threatened areas, due in part to irresponsible diving practices, is the coral reef in the Red Sea. Corals are an endangered species, and Egypt’s Red Sea area boasts some of the largest and most attractive coral reefs globally. While practices have improved and efforts to protect the reefs have been introduced, there has nonetheless been irreversible damage done, not only to the reefs, but to the overall marine biodiversity of Egypt’s waters. Recent sightings of whales, as well as shark attacks, point to the potential that there are unforeseen effects on the ecosystem due to interference in the naturally occurring biodiversity. Solaiman cites overfishing as the main cause for shark attacks, noting that this problem was overcome in Nuweiba and Taba through fish farming, preventing the overfishing and displacement of naturally occurring species of fish in the surrounding areas. He further notes that traditional approaches to tourism and ecological sustainability are not mutually exclusive, pointing to the going green initiatives and developments that have begun to take corrective steps against previously employed destructive practices. The Success Factor Indeed, ecotourism as a branch of diversification of a country’s touristic resources has often proven to be a very successful model. One need only look at the examples of the nature reserves in India’s Rajasthan province to understand how a conservationist approach can also be translated into an opportunity to target a different tourism market. The countless nature and wildlife reserves provide ample opportunity for ecotourism lodges, and the model that has been built through offering a wide
range of different lodging styles to suit the environs offered by each nature reserve. These lodges have become widely popular, and draw a different crowd than that which would be drawn to India’s cultural or historical tourism. The opportunity to visit captivating sites in a country that is otherwise known for urban overcrowding often proves to be an irresistible draw. Moreover, Solaiman stresses the notion that Egypt’s tourism industry has not been “struck”, so to speak, rather it is a question of shifting the culture that dictates the way the industry deals with different crises. “Rather than taking every incident as an opportunity to defer blame or ask for more aid, the more logical thing to do would be to deal with each issue that arises with a sense of humanity, and in turn that would evoke sympathy and encourage tourism, rather than stir fears. There is no ailing tourism industry, rather an incorrect way of dealing with it,” he says. Similarly, this calls for an understanding of the distinctions between different kinds of tourism, and the advantages provided by diversifying the kinds of tourism on offer, as this can only serve to hedge against any risks or shocks that could otherwise affect the market. Thus, from both a cost-cutting standpoint and in terms of sustainability -- in relation to the market as much as the environment -- ecotourism could potentially be the next trend to place bets on, if it is cultivated correctly and for the right reasons. Though numbers are scarce in Egypt, other countries with similar economic conditions, such as India, have seen major returns from the ecotourism industry. In a research paper specifically focused on Parambikulam Tiger Reserve in Kerala, the growth of India’s ecotourism industry alone is estimated at 20-34%, a massive number compared to more traditional tourism. The paper further shows that an approach that is more community-based is more likely to inspire innovation and enterprise in the local community, thereby strengthening the local tourism industry and improving service by building the correct tools for competition. Egypt’s geographical landscape offers more than urban dwellings and resort towns, and it is time to think outside of the age-old misconception that profitability and sustainability stand on opposed poles. THE VOICE OF REAL ESTATE | 33
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“The real estate funds offer individuals and companies an opportunity to invest in assets and properties of high value and revenues, which they may find hard to invest in due to their limited budgets,” Wahdan says.
Interviewing 97 fund managers, who manage about USD 12tn of assets, Invesco states that there has been a general growth in allocations towards real estate, which currently stand at about 11% in the Middle East, compared to 5% elsewhere.
He adds that real estate funds are the best choice for individuals and corporations willing to diversify their investments and increase their returns as they are expected to provide higher interest rates which cannot be found in other types of investment, including bank certificates, the stock market, and gold.
According to a CNBC report, global real estate funds are expected to turn in double-digit performance results this year. Such an expectation was based on the fact that housing prices in Europe and Asia are finally surging after years of being hammered.
Egypt also has another real estate investment fund affiliated to the Egyptians Abroad Company for Investment and Development, targeting investment in under-construction land plots and projects. There is also a third real estate fund belonging to the Housing and Development Bank but it has not yet been put into effect. Real estate experts expect that there will be a huge demand from investors whether individuals or corporates on emerging real estate investment funds in Egypt, making strides in other countries all over the world, especially in a number of Arab countries, including Saudi Arabia and the United Arab Emirates. According to a study released by American independent investment management company Invesco, Middle East sovereign funds have been focusing on income-generating real estate this year after having missed targeted returns last year.
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eal estate experts believe that the launch of real estate investment funds in Egypt will encourage more individuals and developers to invest in Egypt’s property market, especially amid rising prices of residential units and the declining funding capacity of the banks. Invest-Gate explores the existing real estate investment funds in Egypt and their impact on the market. “The Egyptian market is a fertile ground for the growth of real estate investment funds,” Managing Director of Naeem Real Estate Investment Fund Al-Sherif Wahdan, tells Invest-Gate. Wahdan adds that Egypt’s real estate sector has always been a safe haven for investment whether by individuals or corporates, pointing out that real estate funds diversify the investment channels by enabling investors to seize shares in commercial shops, residential units, and shopping malls.
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On April 6, Egypt’s Naeem Holding, one of the largest growing investment firms in the Middle East and North Africa region, announced the start of a private placement for a real estate fund worth USD 65mn. It said that it targets investment in rented properties at a total value of EGP 1bn. The Naeem fund is the country’s first real estate investment fund that gets the approval of the Egyptian Financial Supervisory Authority (EFSA). Its private placement took place over one month and was followed by an initial public offering at the end of May. The fund’s duration is three years and it is expected to make a targeted profit of at least 26% per year. The minimum investment for the private placement is EGP 10mn and EGP 50,000 for the public offering. The firm also announced that it plans to launch another real estate fund before the end of this year.
“An individual may find it hard to buy a residential unit worth EGP 1 or 2mn. However, he or she may be able to afford investing a minimum of EGP 50,000 in real estate assets – a kind of investment that real estate funds provide. Such a channel can encourage many individuals to inject their money into the country’s real estate sector,” Fawzi tells Invest-Gate.
There will be a huge demand from investors whether individuals or corporates on emerging real estate investment funds in Egypt, which made strides in other countries all over the world
According to real estate portal in Egypt and Saudi Arabia Aqarmap, Egyptian real estate posted a 9% increase in housing prices in November following the EGP floatation on November 3. The portal’s data also showed that housing prices in Egypt rose by 35% during the first quarter of the current year.
The real estate funds offer individuals and companies an opportunity to invest in assets and properties of high value and revenues, which they may find hard to invest in due to their limited budgets,
REAL ESTATE FUNDS TO UPLIFT
EGYPT’S PROPERTY MARKET
Likewise, Fathallah Fawzi, Chairman and CEO of MENA Group, says that real estate funds can be a big success in Egypt amid soaring prices of housing units and the inability of banks to accommodate funding the increasing number of housing projects.
It seems that real estate funds can make headway in Egypt by capitalizing on the rising housing prices and the high demand by real estate developers to start more housing projects in the country.
Wahdan says BY MENNA A. FAROUK
The Egyptian market is a fertile ground for the growth of real estate investment funds
An individual may find it hard to buy a residential unit worth EGP 1 or 2 mn. However, he or she may be able to afford investing a minimum of EGP 50,000 in real estate assets – a kind of investment that real estate funds provide Fathallah Fawzi says THE VOICE OF REAL ESTATE | 35
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However, demand for residential projects is not that high but I believe it will come by time once the concepts and methods become more common. Electricity and water are still subsidized for residential projects too so such trend is not feasible.
TDF ARCHITECTS SEES EGP
Devaluation Beneficial to the Architecture Industry in Egypt BY JULIAN NABIL
Aiming to explore the current status and future of the design and architecture industry in Egypt, Invest-Gate meets up with TDF Architects CEO and Founder Hala Saleh, who introduced an ‘Eco-Friendly Interior Design’ concept to architecture in Egypt. In an in-depth discussion with the interior designer and architect, Saleh highlights the EGP floatation effect on the business and also shares the latest trends and designs. You have introduced eco-friendly design methods to the business. Can you explain how and in what way? During my undergraduate years in the USA, it came to my attention, the country’s awareness campaigns in regards to sustainability along with the other global issues, including scarcity of electricity and water. Up until today, there is an ongoing international need for environmental protection. While in the USA, I majored in interior design from the Art Institute of Houston Texas and went on to become an accredited professional in Leadership in Energy and Environmental Design (LEED). 36 | INVEST.GATE | July 2017 - ISSUE 04
Following my return, I wanted to reinforce such ecofriendly methods to make designs since Egypt faced issues of electricity shortage and water scarcity a couple of years ago. Sustainability for us is not only about saving water and electricity. It is, rather, about preserving the environment as much as possible in a number of ways, including the use of eco-friendly (recycled) materials with low rates of outgassing and carbon emissions. At the same time, we try to follow modern and environmentally friendly guidelines in construction in order to limit environmental changes that can cause soil disruption, dust, and noise pollution.
Is there a demand for sustainable design and architecture in Egypt? There is a demand for commercial projects like schools, hospitals, and malls for their feasibility in the long run. Mega projects’ consumption of water and electricity is high so they continuously look for ecofriendly solutions that can help them reduce their operational costs. Eco-friendly methods have also become more of a marketing trend as well; developers, who are environmentally-friendly cautious, are positioned differently from a marketing perspective.
Sustainability for us is not only about saving water and electricity. It is, rather, about preserving the environment as much as possible in a number of ways, including the use of eco-friendly (recycled) materials with low rates of outgassing and carbon emissions.
Are you more drawn to classic or modern design trends in your designs? And how do you tailor designs for the diversified clients? We do not follow a specific kind of style but most of our work is within the contemporary and modern framework. We try to accommodate the lifestyle of our clients and cater to their needs, taking into consideration the geographic context of any project so it does not feel out of place. We always look first at the project’s location and function then we try to blend both in our designs. For example, a second home in the North Coast does not have the same character as a first residence here in Cairo or the countryside; so it all depends on the project’s context. I believe in teamwork rather than a-one-man- show. I find that the final product is much creative and artistic coming from a group of people. How do designs for summer houses differ from that of the main ones? Summer homes should incorporate the seamless indoor-outdoor transitional concept. So, we always try to relate the interiors with the exteriors because we use the homes heavily from the inside and outside. Clients need to feel more comfortable in summer homes than that of primary ones because second homes are their getaways from the hustle and bustle
of their daily lives. We try to accommodate the idea of relaxation, but at the same time with a simple kind of luxury. Summer homes should maintain less complex lines, architects, and accommodation of materials. We also avoid complicated combinations of color palettes, which have to be very much related to the beach. So, we use more the Mediterranean color scheme. To many of our clients, summer is all about social gatherings. Therefore, we always work on making summer homes as modular as possible in terms of usage of furniture like sofa beds, for example. We also try to provide less of storage space and more of livable place by designing different seating areas and spacious spaces. In addition, we focus on daylighting. We use a lot of windows and skylights to reinforce the feeling of being outdoors. Most clients seek to enjoy the natural breeze of the sea instead of having air conditioners. We accommodate that by placing windows on opposite sides to allow more airflow and natural breezes. How do you deal with clients who ask for “unrealistic” designs? Clients do not usually know what they want; so we have to direct them to what can be done. We always look into ways of how to make things happen as long as we understand the technical components of any project. We try to make amendments and recommendations to cater to the clients’ needs. There is sometimes a cut-off “this is not doable” line. However, I believe that nothing is impossible and we always thrive to be different. THE VOICE OF REAL ESTATE | 37
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What are the major projects you worked on in the North Coast?
How do you see the future of design and architecture post float?
We worked on several projects in the North Coast, including a project in Hacienda Bay last year, which won an international design award in the UK. We also carried out projects in Telal, Ghazala, and Costa Del Sol in 2015. And this year, we have projects in Hacienda Bay and Hacienda White.
I believe that the EGP floatation will have a positive impact on the industry in the long run. It will force us to become a more industrial society. So, we will start to focus on product design and manufacturing, which we lack in the local market, thus helping us to create our own character in terms of materials and final product design.
What are the major challenges you faced as a startup and now? The most challenging thing was to build our supply chain database of contractors as well as suppliers of materials and furniture. Our job maintains a high level of details so knowing resources is the key. It is a huge market and it is not easy to find things in high quality. So, knowing what is best locally and internationally is also a challenge.
Not only importing materials have become expensive, but also importing products like furniture. So, this will drive local designers to resort to the local market. The EGP devaluation will also stretch our creativity; it is always easier to design on an open budget, but a restrained budget pushes you to think out of the box and come up with creative solutions to deliver the same aesthetic design at a much lower cost.
The challenge we face now is to maintain being different. We have a track record of projects. So, we work on competitively differentiating our projects.
What advice do you give young designers and architects, today?
How did the EGP floatation affect the industry in terms of costs and final product’s price?
They should explore a lot of things... they need to touch and feel everything. They should work a lot on themselves by interfacing with all technical softwares as well as visiting work sites, factories and quarries. The more they interface, the more they will learn and have a value curve that will make them excel in what they design. If they do not understand technical components of all elements, there is no way to excel. We do not design from scratch. So, the more they get exposed to new ideas and experiences, the more they will be creative.
Prices on everything have almost doubled so the purchasing power has become less, making it very challenging for us because we have to work on delivering the same kind of design aesthetic and quality standards at half the price. We try to find creative solutions to reach the same impact at lower prices. On the other hand, demand did not decrease as we have the same volume of projects but the amount of money people now spend has become less.
demand for residential projects is not that high but I believe it will come by time once the concepts and methods become more common. Electricity and water are still subsidized for residential projects too so such trend is not feasible.
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VACATION HOMES: BUY OR RENT?
I
BY INVEST-GATE TEAM
n a quest for comfort and a relaxing getaway, the ultimate vacation home is always in demand.
Whether to buy or rent a vacation home is a daunting decision on its own. Buying a property, especially a vacation home, could be a wise investment or lead to a monetary loss later on. The same thing applies to renting one. Dwelling in a place for a few days, unencumbered by maintenance issues or upkeep is definitely a perk, not to mention the freedom to enjoy more than one vacation area year-round. However, in the long run, the process of renting rather than buying could be more costly, especially if you vacation often and finding a property to rent could be time-consuming, depending on availability.
Location Often location is the first criterion that holidaymakers consider when choosing a place to purchase or rent. It could be quite a good investment to buy a home that serves as a getaway for all seasons. Buying a place in Ain Sokhna or Ras Sudr, for example, is more convenient than buying a place in the North Coast, as it is mostly seasonal. The distance between the residence and the vacation home is also quite crucial; a place that is two hours away is more in demand than one that takes a seven-hour trip to reach. 40 | INVEST.GATE | July 2017 - ISSUE 04
Distance and climate are not the only aspects to consider when addressing location. The North Coast, for example, has been the hot spot of the summer months for quite some years, rendering it the number one choice of many in terms of location. Other aspects such as community also play a role in location choice, a good example of that is the charming Gouna. Renting provides more options. In fact, the rich tourism resources of Egypt allow holidaymakers to sift through many housing options, whether they overlook the Mediterranean, the Red Sea, or a different place entirely. Having to plan well ahead of the vacation to guarantee a good spot at a reasonable price is something to bear in mind. Prices during the peak season tend to be higher, which could be costly on the long run compared to buying a vacation home.
Ease of Process Unlike residential homes, buying a vacation home is a little trickier. The process requires more homework, with a focus on a good view and safety during and after the holidaymakers’ stay, as well as the proximity to beaches and vital hangout spots. When it comes to touristic places, Egypt has been privileged with some of the Middle East’s most professional developers in the real estate sector.
the project either through the Tourism Development Authority (TDA) or the Tourism Investment Authority (TIA). The buyer should also compare the services, security, landscapes and safety infrastructure-wise,” said Mohamed Roshdy, Vice President of the TIA in Ain Sokhna, in an interview. In case of renting, many web portals have emerged recently to offer easy access to preferred destinations for holidaymakers and at reasonable rates. Airbnb, Booking, TripAdvisor, among others, offer rating-systems to make renting rather safe, efficient and easy. The window of availability could be highly variable, depending on the season or holidays, and cause an increase to the cost or narrow options altogether. Away from digital services, there are vacation seekers who prefer dealing with brokers, since they know the ins and outs of such places. The cost could be fairly equal. However, since the decision is based on one man’s sales pitch, expectations could be shattered upon arrival, as the place could be disappointing in terms of safety, available amenities and services, and the overall condition of the place. Ultimately priorities of holiday seekers will determine whether the better decision is to buy or rent.
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Safety Concerns Discarded over
EL-DABAA NUCLEAR PLANT VICINITY NAYROUZ TALAAT
E
gypt’s real estate developers are seeing great potential in the El-Dabaa Nuclear Power Plant project, believing it to have a lot of economic benefits for the country, as well as, encourage the establishment of residential projects in the El-Dabaa city. However, safety of residences within the vicinity of the plant remains in question. InvestGate brings this issue to an end. Although some have raised concerns about safety matters in this area, others believe that there are no safety worries whatsoever. “Many developers look at the new nuclear project positively,” real estate consultant Mohamed Tharwat says. “They are only seeing the positive side of the nuclear project, saying that it will give a push to investments in the North Coast rather than highlighting that there are safety hazards in this area,” Tharwat tells Invest-Gate. Ahmed Daroub, a representative from Greenpeace Egypt, an international environmental NGO, has criticized Egypt’s plan to build its first nuclear power plant. “There are huge risks associated with the nuclear energy in terms of safety …we have two experiences -- Chernobyl in the 1980s and Fukushima two years ago in Japan -- not to mention we will be leaving a huge burden on the future generation in the form of nuclear waste,” says the activist. On the other hand, other experts and real estate developers believe that hazards from nuclear power do not stop countries from building nuclear plants. 42 | INVEST.GATE | July 2017 - ISSUE 04
As a real estate developer, CEO and Chairman of MENA Group Fathallah Fawzi highlights that there are no concerns about this safety issue among the country’s property developers. “It will be hard for any country to protect buildings surrounding a nuclear plant. And there are several cases of nuclear plant leakages and explosions that other countries could not do anything about,” he tells Invest-Gate. Around ten projects have been unveiled recently along the North Coast, promising sound investment and ample vacation time. Investments in Egypt’s real estate sector have been growing over the past years. According to data released by the Egyptian Ministry of Housing, combined investments of the public and private sectors in the property market reached EGP 6.58 bn (USD 741 mn) during the previous fiscal year. Not limited to Cairo, the current boom in Egypt’s real estate sector has extended throughout the entire country, including the North Coast. Real estate consultant Tharwat notes that until the moment the country did not reveal that there will be any hazards of the nuclear power project and all the decisions are based on studies conducted by the developers themselves in regards to the location of the project off El Dabaa area. From his viewpoint, “If we thought of the hazards, it would not only be of concern to the projects established in the North Coast, but the whole country as well.”
Mentioning the real estate projects that are currently located in El Dabaa, Tharwat refers to the residential, entertainment projects, including La Vista, Fouka Bay, City Stars North Coast, Jefaira, and Coast A2 to name a few. According to him, there are no hindrances to progress that have loomed so far concerning the residential projects near El-Dabaa, as sales show that for example a company like La Vista is making good purchases and selling deals. “In addition, I see that all big developers are eyeing more investments and land purchases in El-Dabaa,” he adds. At the same time, Inertia CEO Ahmed El-Adawy confirms that Inertia has no concerns regarding investing in the area of El-Dabaa, noting that the safety of the project is guaranteed to the country as a whole by both the Russian and Egyptian governments. “It is not only guaranteed for the projects that are near the nuclear power project, but to the whole country as well,” El-Adawy tells Invest-Gate. “If something is to happen it will affect the North Coast and Cairo alike,” he points out. El Dabaa is a city in the governorate of Marsa Matrouh, 183.9 miles from Cairo on the North Coast and is served by the El-Alamein International Airport. El-Dabaa nuclear plant is scheduled to operate in 2019. The plant, which will be used for six years, will function as a light water reactor with a planned capacity of 950 to 1,650 megawatts. In November 2015 and March 2017, Egypt signed
preliminary agreements with Russian nuclear company Rosatom for a first VVER-1200 unit to start in 2024. The project has been delayed for a long time in ex-eras of successive leaders, but finally Russia has signed a deal to build the nuclear plant. According to a statement by the Rosatom, Russia’s nuclear power corporation, the project has been praised and recognized by local and regional officials. Secretary General of Egypt’s Energy and Environment Committee Alaa Salaam spoke publicly in support of the project, ’The El-Dabaa Nuclear Power Plant (NPP) will give Egypt a clean energy source. The nuclear power reactors to be installed at the El-Dabaa NPP do not emit gases that contribute to the greenhouse effect.’ The plant, a Rosatom statement reads, will be the world’s first Generation 3+ nuclear reactor, paving the way for the future of nuclear power. “Ever since the world’s first commercial nuclear power plant in Obninsk, central Russia, was connected to the grid in 1954, nuclear technology has been evolving continuously to make new reactors safer, more powerful and more efficient.” These developments, it adds, have mostly happened in waves, resulting in several generations of nuclear reactors that are typically distinguished. Generation I reactors were developed in 1950-60s and are virtually extinct today except for a few units still operational in the UK. Generation II reactors, whose heyday was in the 1970-1990s, are still largely running around the world after their design life was extended from 3040 years to 50-60 years, the Russian company says. It also notes that Generation III reactors, developed to incorporate improvements in fuel technology, thermal efficiency, safety systems and operational
lifetime, first came online in the late 1990s and are still being constructed worldwide. “With Generation IV designs still on the drawing board, the next step in nuclear reactor technology from Generation III is Generation III+, developed to have enhanced safety systems, a longer operational lifetime and decreased both core damage and large release frequencies, among other features,” the statement reads. Former IAEA Chief Inspector Yousri Abu Shadi has also assured the public that the El-Dabaa
NPP design will feature ‘the most modern safety systems’ and is preferable to conventional thermal power stations. He also notes that each VVER-1200 unit of NPP will generate USD 1 bn per year for the country’s economy. It seems that despite the fact that there are some questions hovering over the safety of El-Dabaa nuclear power plant, Egypt’s real estate developers are not worried and see great potential in the area for future investments.
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NEW EL-ALAMEIN CITY TURNS HEADS AS EGYPT’S NEW RIVIERA
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N the north western coast of Egypt near the Marsa Matrouh governorate, workers are racing against time to complete the first phase of a new multi-million-dollar eco-city under development to become Egypt’s “new Riviera”. “New Alamein City will change the map of that part of the country and give a major push to the Egyptian economy,” Tarek Shoukri, Chairman and CEO of Arabia Group, says. Shoukri adds that the New Alamein City would be a comprehensive project that includes touristic, residential, agricultural, and industrial segments. “There will be hotels, residential projects, a zone for agricultural production, and factories where these products will be manufactured for exporting to other countries,” he tells Invest-Gate. Spanning an area of 48,000 feddans near the Mediterranean town of El-Alamein, the New Alamein City is being built at a total cost of USD 337 mn. The city is expected to contribute to accommodating a booming population, curbing unemployment, and stimulating economic growth. “The city will be a starting point for a new generation of new cities as it will rely on making use of natural resources, including water and energy. We will make use of the city’s proximity to the coast and
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BY MENNA A. FAROUK
provide drinking water through desalination using solar energy,” Mona Kamel, spokesperson of the New Urban Communities Authority (NUCA) says.
consist of only closed resorts that merely work during the summer season. Facilities and services will keep it alive all year long,” he adds.
In a videotape released by the New Urban Communities Authority (NUCA), the New Alamein City features 16 hotels, sports clubs, a cinema complex, theatres, a scientific research center, a yacht harbor, a business center, residential projects, and resorts.
Arabia Group, Shoukri adds, was hesitant to establish a hotel in the North Coast before the announcement of the new city project. However, with the announcement of the new project, the company was encouraged to begin working on the idea. “Construction works of the new hotel will start in October after we conclude all necessary agreements with contracting companies,” Shoukri notes.
“The New Alamein City will be very attractive to investors and real estate developers as it will encompass hotels operating for at least 6-7 months a year, touristic villages, a commercial zone and an entertainment park,” Kamel tells Invest-Gate. The new city will host a 14-km-long Corniche which will be open to the public, a privilege many summer vacation seekers do not enjoy in that area as the North Coast only consists of closed tourist villages with high rental or purchase rates, Kamel says. The new city is already turning heads, as many real estate developers and investors are encouraged to start residential and commercial projects in the area after the announcement of the project’s launch. Shoukri says that the city is designed to be sustainable and will have a targeted total population of one million. “The North Coast will no longer
Chairman and CEO of Sabbour Consulting Hussein Sabbour, meanwhile, says that with the launch of the New Alamein City the government is aiming at reviving the Egyptian coasts after previous governments have failed to capitalize on the potential of the North Coast. “The government today is working on attracting foreign tourism to our Mediterranean shores and stop focusing only on locals,” Sabbour tells Invest-Gate. Sabbour also says that, according to the government plan, the North Coast is to be divided into clusters starting by its shores, moving backwards till the middle of the desert. “The first cluster will include international hotels open[ing] directly on the coast. The second will include entertainment and retail facilities. The third part will feature permanent
housing, followed by acres and acres of agricultural lands,” he notes. The government first announced the establishment of New Alamein at a press conference in 2014. At an April, 2017 meeting with President Abdel Fattah El Sisi, Minister of Housing Mostafa Madbouli said that the first phase of the project is progressing according to the set timetable and would be concluded within a year. The first phase, he added, comprises the establishment of an international tourism center, a museum, galleries, an international park, a university, a service center, and the upgrading of archeological sites. Madbouli stated that the government would also establish 10,000 residential units in the city during this phase, which will encompass 8,000 feddans. Last year, the government earmarked USD 59.6 bn from the state budget to carry out developmental and infrastructure projects such as roads, bridges, electricity, and sanitation networks in the new city. The contract for the infrastructure work in the first phase of the project has been assigned to the Arab Contractors and the Société Egyptienne D’entreprises (known previously as Mukhtar Ibrahim).The city will include an industrial zone, an agricultural zone, a business zone, an educational zone, an international medical center, and renewable energy stations. In the first phase, the expected population stands at 400,000 out of the targeted one million residents. A host of projects will also be offered to investors shortly after supplying the city with all basic facilities. Kamel says that the New Alamein City will also be an eco-friendly urban community that relying on
renewable resources. In the city, the government plans to establish a desalinization plant and solar energy stations.
with Russian nuclear firm Rosatom to construct the power plant. Construction works should be completed by 2022.
Egypt has ambitious plans to develop clean energy options on the northwestern coast. In late May 2016, the Egyptian government received an EGP 222 bn (USD 25 bn) loan to finance construction of a nuclear power station in Dabaa, located west of Alexandria.
Experts say that if the New Alamein City project is successfully accomplished, it would heavily alter the North Coast and would have a profoundly positive impact on Egypt’s future. The new city will be the first of its kind in Egypt in terms of addressing broader global issues of climate change and sustainability, helping create a sustainable future for the country.
The loan will cover 85% of construction costs, while the Egyptian government will provide the rest of the funding. The government is close to finalizing plans
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to major international brands with a strong pipeline of hotels under development. Egypt is no different when it comes to development growth. One of the largest foreign direct investors in Egypt is UAE’s Emaar Group, present in Egypt through its subsidiary Emaar Egypt. The company has an ambitious building plan, including some of the country’s most exciting luxury and iconic development projects that are currently in full swing. Emaar Misr is working on reaching the status of one of the country’s largest real estate companies, through major projects such as Uptown Cairo, Mivida and Marassi, providing significant impetus to the local economy by creating vibrant, mixed-use projects that define a new way of life and explore new opportunities in the Egyptian real estate sector. As for Emaar Misr’s portfolio, the projects are in different stages of development and others are due for handover, showing the exceptional performance and tremendous investor confidence. Uptown Cairo spans a 4.5 million square meter site, and features a business park, a town center, a mall, resorts, a spa, sports and leisure facilities, a golf course, and luxurious residential villages. Emaar Square is home to Egypt’s largest open mall and a five-star premium Address Hotel. The- 3.8 millionsquare-meter Mivida pioneers a new residential concept in Egypt, by introducing smaller, smarter, and cost-competitive fully finished and ready-tofurnish homes. Marassi is a- 1,544- acre- tourist resort project located in Sidi Abdel-Rahman and El-Alamein, and has seven distinct lifestyle districts, 3,000 hotel rooms, a marina, a golf course, and healthcare facilities.
HOSPITALITY SECTOR IN MENA REGION ON THE RISE BY INVEST-GATE TEAM
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ot only are the World Expo 2020, in Dubai, and the World Cup 2022 in Doha propelling hospitality real estate market growth in the Middle East but there is a marked inclination towards investing and expanding in the ever thriving sector. The real estate investment trusts (REITs), hotel and gaming companies, retailers, and public sector entities are only a part of a bustling investment industry of high-flying real estate investors throughout Africa and the Middle East. In that regard, the industry has witnessed an increase in 2015 and 2016 due to the aggressive growth of retail properties, hotels, golf courses, office buildings and developmental projects. According to the Ventures GCC Hotel Market Overview, the value of the Gulf Cooperation Council (GCC) hotel sector’s projects, to be completed this year, are worth AED 9.51bn - an increase of AED 8.24bn compared to 2016. A robust pipeline of hotel construction projects drives such a growth. The UAE is the largest market in terms of construction projects lined up for completion, followed by Saudi Arabia and Qatar.
expected to be delivered in Dubai over the next two years as capacity expands in the run-up to the event. Four Seasons, a renowned luxury brand, opened in Abu Dhabi last year. Lying on Al Maryah Island, in a vibrant urban sanctuary and overlooking the water, the hotel offers expansive views of the city’s skyline and the Arabian Gulf, and balances urban chic with understated luxury through 200 accommodations, including 38 suites. In Egypt, meanwhile, the Starwood luxury brand of St. Regis, opened a St. Regis hotel in October 2016. Overlooking the Nile, this special edifice has been designed by the top contemporary American architect, Michael Grave, to include a –luxe- 39- storey- hotel and a residential complex. Hospitality Sector Resilience Despite some negative publicity associated with the region, hospitality growth in the Middle East has been on an upward trajectory clearly demonstrated
by the magnanimity of property and hotel investments, such as Jumeirah, the brand that is exponentially growing in the region and overseas. “It is what Wall Street is looking for, nowadays; they are looking for projects that they can invest in, that are not always conservative and do guarantee returns,” Commercial and Hotel Real Estate Expert and Investor Craig Consentino says. Market Performance It is likely that the demand in a Gulf country like Saudi Arabia will continue to be affected by the slump in oil prices and the numerous new entrants to the real estate market that will inevitably affect the overall market performance. On the upside, many international brands are planning to target the market in the second largest city in Saudi Arabia, Jeddah. That aims to increase the current number of rooms by 75%, which is bound to the performance levels recorded across hotels. Riyadh is also a home
This REITs community worldwide is fascinated by the growth throughout the MENA region and expects that it will continue to be strong, leading up to the Expo 2020 in Dubai and FIFA 2022 in Doha. A new report released by business consultancy firm, EY, says that Dubai hotels had the highest occupancy levels in the Middle East and North Africa (MENA) region in April this year. The hotel benchmark report provides a monthly performance overview of leading hotels in the Middle East. In Q1-2017, all MENA markets with the exception of Cairo, Beirut, and Kuwait witnessed a decline in room yield compared to Q1-2016. Dubai overall hotels maintained the highest MENA occupancy in the first quarter of the year at 86.8%. The report adds, “Dubai city hotels continued to lead in terms of the highest occupancy in the region, recording 88.6% occupancy in March 2017. However, average daily rates (ADR) in Dubai dropped by 8.4%
average daily and occupancy rates which remain at healthy and strong levels,” states CBRE Group.
In Dubai City Hotels Average Daily Rates (ADR)
Occupancy
In March 2016
USD 309
USD 272
In March 2017
USD 283
USD 246
to USD 283 in March 2017 from USD 309 in March 2016, coupled by a slight decline in occupancy by 1.5% when compared to the same time last year, leading to a decline to USD 245 in March 2017 from USD 272 in March 2016.” Middle Eastern investors are expected to spend USD 180bn in commercial real estate markets outside of their own region over the next decade, the majority of which will be located specifically to commercial and to hotel investments, reported American commercial real estate company CBRE Group. Additionally, the trend of Dubai being viewed as a global business and leisure destination should continue in the coming years, backed by the government’s pro-tourism initiatives. “Investors are confident in the potential of the UAE, especially Dubai and Abu Dhabi as they have implemented ambitious growth strategies. Dubai leads the tourism and hospitality market and has plans to attract 20 million tourists annually by 2020 leading up to the World Expo. The hospitality sector has shown competitiveness adjustments, resulting in lower
Throughout the Gulf region, and due to the nature of Doha’s room supply, which is heavily skewed towards luxury properties, Doha is able to yield high average room rates for the region. However, they have been under pressure and decreasing since 2008. This pressure will be compounded further by the 15,400 new rooms in the pipeline, which represent a doubling of total stock in the coming years. Development of leisure tourism will remain critical to the long-term tourism growth in Doha particularly, beyond the 2022 FIFA World Cup event. The Middle East has proved itself as fertile ground for real estate investment in general, and the Gulf’s affinity for expanding tourism and hotel sector in particular. The region shows keenness in covering every aspect of the business, ensuring steady customer demand, all the more reason the thriving business of hospitality will become a pivotal contributor to the Middle East’s real estate sector.
Experts forecast 2017 and 2018 to be the busiest years, with 56 project openings scheduled this year and 58 in 2018. Dubai and Abu Dhabi will continue to lead in hotel construction across the UAE. In the hotels sector, a further 28,900 rooms are The Hospitality Real Estate Market in the Middle East The Predicted Projects in 2017
56 openings
The Predicted Projects in 2018
58 openings
The Predicted Rooms in 2018 & 2017
28,900
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