Sales office spaces in Egypt have witnessed significant growth in the commercial real estate sector in recent years – particularly among Cairo’s suburbs – as business hubs became appealing for occupants and investors chiefly seeking flexibility, security, and value. Consequently, this boosted the business and recreational standards of the country’s present office spaces; thus, the number of office buildings among Egypt’s coastal destinations is accelerating in light of their potential opportunities.
Not long ago, Orascom Development Holding (ODH) introduced the first business park at its exceptional Red Sea destination, El Gouna, aiming to launch a one-of-a-kind business district situated by the seaside. The development became much viable as ODH signed an agreement with a German-based company to develop the first office building at the hub. Invest-Gate explores the dynamics and challenges of applying such strategy in coastal destinations and the forthcoming developments in the pipeline, in addition to developers’ future outlook for the business climate and potential opportunities across these areas.
Modern Business Hubs: A Foreign Direct Investment (FDI) Agent
El Gouna’s location on the Red Sea and its mild weather not only do they deem it as a prominent holiday destination, but also destine it to be a prime location that hosts numerous businesses and coworking spaces.
In this regard, ODH signed a nine-year lease agreement with the German-based company, to lease the first office building in El Gouna’s business park, at a total cost of USD 6.7 mn. ODH is set to develop the office space at Al-Bustan area south of El Gouna over a total land area of nearly 8,000 square meters and a built-up-area (BUA) of 6,330 square meters, scheduled for completion in June 2019, according to a company’s statement.
General Manager of El Gouna Mahmoud El Baroudi highlights that the new office building is “a welcome addition to the existing business infrastructure communal offices at G-space,” as ODH endeavors to “remain true to its fully-integrated, green, and family-friendly DNA,” he elaborates.
“ODH expects it to drive other international and national companies to see the potential of offering their employees top-quality office buildings combined with great living standards by the sea,” El Baroudi tells Invest-Gate.
Furthermore, the general manager affirms, “El Gouna will also remain on the map for international travelers and investors in order to promote Egyptian tourism and FDI.”
“The success of opening the business park is that it will highlight a new geographical offering to multinationals that wish to relocate,” El Baroudi reveals.
Some Key Factors Uncovered
JLL reveals factors that attract investors:
• Supply of car parking
• A ‘plan’ to control environment
• Transportation links
• Building quality
• Amenity offers
Business parks were initially seen as an office space for mostly technology-based companies, but in recent years their appeal has spread to a broader occupier base such as pharmaceuticals, utilities, oil and gas, and media segments, all of which benefit from spacious floor plates and land plots that are strenuous to come by in town centers.
Concerning the amenity offer attribute, JLL says in a report “when trying to attract occupiers, the quality of amenities and surrounding environment is just as important as the quality of the building. The presence of cafés, bars, convenience stores, gyms, schools, and doctors help create a sustainable community that can compete with a town center offer.”
Consequently, ODH’s vision is in harmony with JLL’s key attributes for successful business parks as El Baroudi highlights, “El Gouna already offers its community a world-class hospital, national and international schools, a university, real estate and housing developments, as well as, commercial hubs and office spaces.”
Will Coastal Areas Roll-Up The Game?
The main purpose of establishing business parks in coastal destinations is to develop new integrated communities, hosting a number of businesses and residents. For instance, El Gouna’s business park is another successful footprint under ODH’s strategy of turning El Gouna to an all-year-round destination and increasing the number of its residents.
“ODH wants to continue to attract families to move to El Gouna permanently and continues to be the place young entrepreneurs see their dreams come to fruition,” El Baroudi tells Invest-Gate.
The New Borg Al-Arab Park
An additional representation to the strategy of developing business parks in coastal destinations is the New Borg Al-Arab Park, Alexandria’s forthcoming business hub.
Situated in New Borg Al-Arab city, the business park check marks almost all of JLL’s key drivers as it is set to encompass the essential modern services and amenities including a wide range of commercial and business facilities, national and international schools, an international airport, hotels and motels, residential compounds, as well as, healthcare services.
Developed by Silicon Waha, a leading joint-stock company (JSC), aiming to spread science and technology parks across second-tier cities, New Borg Al Arab City is embraced by a 32-kilometer coastline on the Mediterranean Sea in north Egypt; together with a new rail line linking Borg Al Arab to Alexandria.
The business park is substantially targeting the young population, seeking education and job opportunities. “New Borg Al Arab City is a virgin hub for young people from Alexandria studying, working, relocating, or living in a quite new spot,” according to Silicon Waha’s official website.
Suez Canal Corridor Development
• Maritime-related activities
• Industrial development
• Infrastructure opportunities
Across: Port Said – Ismailia – Suez-Sokhna
(Sources: ALEXBANK and the Italian-based Mezzogiorno Study and Research Center SRM)
For the time being, plans for the expansion of
business parks across Egypt’s coastline are rooted
in such destinations’ potential to become major
business hubs; given the abundance of land
available in the areas’ hinterland, as well as, its
location and number of occupants and residents
in the region.
Simultaneously, a new mega-project is on track to transform the Suez Canal Zone (SCZ) into a world-class logistical and industrial hub that serves both the European and Asian markets. Strategically located alongside one of the world’s vital maritime routes, which implies outstanding potential returns, the SCZ is supported by the recent expansion of the Suez Canal and is expected to provide opportunities for the development of industrial and logistics districts to establish fully-integrated business hubs.
Strategically located alongside one of the world’s vital maritime routes, which implies outstanding potential returns, the SCZ is supported by the recent expansion of the Suez Canal and is expected to provide opportunities for the development of industrial and logistics districts to establish fully-integrated business hubs.
On the other hand, commenting on the future outlook for El Gouna, El Baroudi tells Invest-Gate, “ODH is always looking at expanding its offering, but the key for the short-term is to improve the existing services to accommodate a growing residential population and at the same time maintaining and even enhancing the quality of life that is currently offered.”