Kerten Hospitality’s 1st Project to Open in Egypt Soon

Kerten Hospitality’s 1st Project to Open in Egypt Soon

Becoming the lifestyle partner of Tatweer Misr, Kerten Hospitality seeks to contribute to the ESG landscape in the country.

With over 40 projects worldwide, one of which is soon opening in Egypt’s new area Il Monte Galala, Kerten Hospitality is ongoing with its global footprint expansion. In an exclusive interview with Invest Gate, the Group’s COO Wafik Youssef focuses on the real estate opportunities in Egypt, highlighting the potential for growth in the country, and hinting to the group’s interest to expand further.

In our interview, we focus on how a mixed-use, ESG and lifestyle operator, such as Kerten Hospitality, is turning the hospitality landscape in Egypt 1800 degrees. Below are excerpts from the interview with Youssef

Kerten Hospitality COO Wafik Youssef


Introduce Kerten Hospitality in brief and your projects in Egypt?

We are a hospitality group – a mixed-use, ESG and lifestyle operator. We manage and operate hotels, serviced apartments, branded residences, as well as fully serviced offices, a concept, which serves as a collaborative social and business hub. All our projects are mixed-use with a long-term, short-term and a working component that are contributed by food and beverage, retail, health and wellness facilities. This is the core of our mixed-use philosophy that helps us curate community-centric lifestyle destinations suited for local and international guests alike.

We have a portfolio of 12 lifestyle brands: The House Hotel and Residences, Cloud7 Hotel and Residences, Ouspace, Food Souk, Nakhati, Joontos, Munch & Go, Nyssa Beach, Mhamo and UBBU – our ESG program, which we integrate in all our projects, connects local communities and initiatives that help drive local sustainability initiatives to our projects.

Before we do a deep dive into our projects in Egypt, I would like to highlight our global presence, type of mixed-use projects and key collaborations that build destinations, support communities, and help contribute to the socioeconomic environment in different ways.

Our lifestyle destinations – The House Hotel Jeddah CityYard in Jeddah (KSA) and Cloud 7 Ayla Aqaba in Jordan have each become a preferred destination where locals and international travelers meet and connect, host pop up events, farmers’ markets and rollout our ESG initiatives on the ground.

We have a pipeline of 40+ projects in Georgia, Italy, Egypt, Kuwait, Jordan, Saudi Arabia and the UAE that range from Art Hotel in Tbilisi, a boutique destination in the heart of Rome, an eco-resort in Abha (KSA) to a suite-only boutique hotel in Kuwait, a new entertainment-centered property in Ayla as well as boutique hotel in the wine area of Kakheti in Georgia.

In Egypt, we are particularly proud to be part of the second flagship developments by Tatweer Misr – Egypt’s largest developers who are our partners. Il Monte Galala and Fouka Bay are two sustainability-focused smart communities that are definitely game-changers for hospitality in Egypt.  Here, empowered by technology and innovation and through meaningful collaborations, residents and visitors will be able to work, play, stay, dine, and be entertained. In a nutshell, these will be the places for all ages, lifestyle preferences and both short and long-term stays.


How do you evaluate Egypt’s economy today and what do you think about the direction the government is currently taking?

We have witnessed the government’s tremendous efforts over the last five years which managed to overcome the political and economic turbulence that the country has experienced. Before joining Kerten Hospitality, I had led the expansion of several other brands into the market in Egypt. As a frequent visitor since 2015, I can confirm seeing the progress and the many developments that took place, made a change, and have delivered tangible output. The country’s economy is on an upward trajectory of growth when you compare it to others on a global scale. Following the currency devaluation, the incentives adopted to encourage foreign investments as well as the ongoing nationwide infrastructure developments, it is safe to say that Egypt’s economy is booming showing no signs of slowing down. There is revived appetite to enter and be involved in one of the region’s biggest countries.


How do you assess the investment climate in Egypt today?

It is stable, healthy, and attractive for new businesses seeking to expand into untapped new turfs that focus on the new real estate direction hungry for sustainable, ESG investments that build up assets with long lifecycles, a focus on sustainability and smart cities infrastructure. Undoubtedly, the country is on a spiral of growth in the real estate sector. There seems to be two separate real estate environments – a ‘’regular” real estate environment and the so called “elite developments” that each features a different kind of user. This observation pertains to many different areas, starting from Cairo across to the North Coast, and all the way to the cities on the Red Sea. In a nutshell, Egypt has created something akin to an “elite” real estate bubble.

Today, in the branded residences component, for instance, we have identified price exaggeration per square meter – which is the real trigger of the “elite” real estate bubble. In the meantime, the non-elite class that enjoys disposable income, has in a way remained an overlooked and neglected market.

The ease of doing business in a transparent and straight forward manner is a major impetus for foreign investors’ entry into any country. An easy and clear process of transactions allows for capital influx by the investment community who opt for fast-paced decision-making when it comes to investments in development projects. It’s refreshing that Egypt has taken many steps forward in building a healthy investment space.


Would the devaluation of the currency compensate the exaggerated square meter price you just mentioned and encourage foreign investors to buy properties here?

Devaluation doesn’t mean you have a higher value for the US dollar. If prices continue to drastically increase, then the value remains the same. Institutional investors make those calculations given the increased cost of everything. So, a deliberate downward adjustment of the country’s currency value does not necessarily guarantee a higher value or a return on investment. Compared to other countries like Singapore, Hong Kong, UAE, and KSA – all places with booming real estate markets, devaluating the currency would not encourage more investments. What Egypt needs to further develop is a proper infrastructure for such transactions – be it with or without the currency devaluation.


Speaking of the idea of real estate export and given the current circumstances, do you see it coming into effect?

There are signs of greater interest by foreigners to enter the market, however, these still happen on a much smaller scale. For foreigners, Egypt is a fantastic country with its natural resources – good year-round weather, nice beaches, and beautiful nature. Egypt is a place that offers good value for money – even if not across the whole country but over some targeted destinations. For instance, Upper Egypt is not on the radar of investors. Whilst primary cities like Cairo, the North Coast and Sharm El Sheikh will always be attractive to investors, those seeking new opportunities tend to look at the overall landscape of the country and compare it to other countries in the GCC. However, one key question remains: What is the difference in the offering that would encourage them to invest in Egypt and not in the GCC, for instance? The answer remains to be seen within the context of creating attractive incentives and the proper infrastructure.


In what way do you see hospitality adding to the real estate market?

Hospitality is the biggest contributor to the growing interest of developers, owners and investors pursuing an entry into the real estate market or potentially exploring more opportunities to grow their current developments. The reason for this is simple: The minute a real estate investor adds a brand to their developments, their premium increases immediately and that justifies the price increase. The hospitality factor, with its brand and services, automatically adds to the value of the development regardless of its size. This leads to the clients’ satisfaction as well with the type of investment that they are pursuing.


How does Kerten Hospitality standout in the local market in Egypt?

As I mentioned earlier, we are a mixed-use, ESG and lifestyle operator with a community- centric approach to building lifestyle destinations. We create a destination with a short term and long-term stay component in collaboration with retail, health, wellness entertainment and food and beverage brands. We are flexible and don’t go by brand standards – which is the typical approach of any hotel company. We choose to go by brand guidelines and bring existing assets or new ones to life regardless of their size and location. We approach all our projects from a mixed-use perspective – with multiple components for short or long stay, hotel or residence, food & beverage, and workspaces with a social/business hub, etc.

We bring together mixed-use facilities that create a holistic ecosystem or a community fitting both local and international guests. Our unique approach is linked to the way we work with every owner in ensuring we create a project that maximizes the space and becomes a hub. This helps us drive greater profitability per square foot, which exceeds the benchmark of other brands. Whilst the majority of the other industry players stick to a certain size, standards, or style, we look at all aspects and bring them all to life holistically. Our standards are limitless. In fact, our current pipeline includes 40 projects globally with each being a different size – our mixed-use projects vary from 17 rooms to 2000 rooms.

And as we start rolling out our ESG roadmap across our teams and properties, we are going to reinforce our commitments from the very first engagement in each project. Our ESG initiative UBBU is part of our company ethos, and we are going to drive this more significantly through our teams, partners, suppliers, and the community with the focus on locality. This is where we really standout. We simply walk the talk.


What other areas in Egypt is Kerten Hospitality currently investigating?

Our global portfolio is increasing across KSA, the UAE, Jordan, Italy and Morocco. Egypt is our primary focus now where our destinations are coming to life with our first project in IL Monte Galala that is going to be inaugurated in October this year.

We will continue looking into other destinations across the country, including primary and secondary cities.

Although our primary focus remains on Galala City and the North Coast – the two locations where our projects are, we are interested in pursuing opportunities in Cairo and the New Administrative Capital. With the government redirecting all the attention to this new city, we find that it holds a great potential for the hospitality business. Along with Cairo’s downtown area, these will be the three key spaces that will always be a hub for hospitality, and this is one of the reasons behind our consistent interest in a footprint expansion there.


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