Tatweer Misr to Make Egypt’s Seasonal Tourism Permanent

Tatweer Misr to Make Egypt’s Seasonal Tourism Permanent
Tatweer Misr Managing Director Ahmed Shalaby

Presenting picturesque resort destinations with a communal twist, Tatweer Misr’s projects include Il Monte Galala Ain Sokhna and Fouka Bay North Coast. Invest-Gate sat down with Tatweer Misr CEO Ahmed Shalaby to shed light on the company’s embarked projects in Egypt and discuss the real estate market’s ups and downs, as well as expectations for the future.

How do you view the real estate market in Egypt in terms of corporate investments and personal ones?

The economic challenges have led many to turn to real estate, which is seen as a safe haven and a good long-term investment. The floatation of the pound has a positive effect on the market, in my opinion, creating an attractive investment climate, which will eventually bring stability. Without a doubt, the inflationary pressure will decrease disposable income, directly impacting Egyptians’ purchasing power. The price increase of units will push further, additional pressure on clients. The float affected home-buyers in two respects–firstly, because of higher prices on all products and secondly, due to the devaluation of their savings and the growing gap between their access to a unit and declining purchasing power. While we cannot definitively determine the outlook for the upcoming period, we do not expect that the demand on housing will vary in the near future.

In terms of corporate investment, this certainly is and will always be a matter of supply and demand. The supply of residential real estate across all sectors is still behind demand if you look at the demographic landscape of Egypt. Considering population growth, experts believe Greater Cairo will be undersupplied by approximately 400,000 units by 2020. Taking just Cairo into consideration, we do not expect saturation until several years ahead. Demand for residential units is expected to increase by approximately 115,000 units every year, with a rising supply of 40,000 to 50,000 units per annum. The market is undersupplied, particularly within the middle-income cluster.

What are the market challenges in Egypt?  

Despite any challenges, the property development market will continue to be attractive to local and foreign investors alike. The difficulty we face today is the availability and price of land; however, the government is currently working on amending legislation to facilitate this process.

Other arising issues requiring immediate attention include the cost of currency and the cost of financing, which have had the largest impact on developers.  Regarding contractual agreements between the government and the private sector, those must be subject to extensions reflecting current economic realities and should offset operational setbacks as a result of the float.  The government’s responsiveness and timeliness of these decisions will represent an important aspect of doing business in the future for any investors seeking to enter the market.

Why did Tatweer Misr start by touristic destinations, namely Fouka Bay North Coast and Il Mounte Galala Ain Sokhna?

It was a strategic decision related to how we wanted to position Tatweer Misr’s first developments.  Given the option of building in New Cairo or a touristic resort on a mountain, we went for Ain Sokhna.  Developing a touristic resort, especially one in the magnitude and complexity of Il Monte Galala is infinitely more challenging, costly, and difficult than developing a mixed-use complex in a Cairo neighborhood.

Fouka Bay, Ras El Hekma, North Coast

With the continued high demand for high-quality residential communities in these areas, both Il Monte Galala and Fouka Bay were an opportunity for us to create something inherently unique, representing our philosophy as a company to provide value to our clients rather than just a location.  The complexity of the Il Monte Galala project made us stand out, and to Tatweer Misr, both projects are only the beginning. We aim to repeat such a value proposition across other non-touristic areas.

How do you see the government’s continuous developmental projects in Ain Sokhna? Will Egypt help boost it as a touristic and residential destination for locals and foreigners?

Developing the Suez Canal and all of its surrounding area creates very strong potential for Ain Sokhna to become a global industrial, commercial and touristic hub. While tremendous efforts must be expended to achieve comprehensive development for the whole area, everyone is working on benefitting from the exceptional location of the canal in transforming the surrounding area into a national and global center for industrial investments and transit tourism. Once founded, the area can offer significant job opportunities in parallel with successive developmental projects.

As a local touristic destination, Ain Sokhna is already strong given its close proximity to Cairo, its wonderful beaches, and its climate. However, international tourism is the target area for development.

Will those destinations, especially the North Coast, be active all year? Or will they continue to be seasonal destinations?

The North Coast and Red Sea Coast are two diametrically opposite cases. Tourism investment on the Red Sea coasts on the east and in South Sinai created sustainable investment, development and job opportunities. The North Coast, however, created static investment assets that are sold once and frozen into private property of seasonal activity only. One could say the development of the northern and eastern coasts of Egypt is basically the brainchild of two different mentalities. The east coast was established with a touristic development mindset, whereas the North Coast was developed with construction and urban development in sight. The east coast relied on long-term legislation that leased -not sold- the land to investors, which in itself guaranteed serious investment. It was required that no more than 20% of a tourist project be sold for private ownership, with the remaining 80% operated by the hospitality business. The 300-kilometer-long North Coast stretch is occupied by summer resorts and only includes a few isolated hotels, while all other residences are privately owned.

However, it seems that the perception of the North Coast is about to change. There is indication that the unexploited strip between Alamein and Salloum will be subject to another set of guidelines, thereby attracting potentially long-term touristic investment among others. New projects will exploit to the optimum given the natural resources, mainly the beaches, attractive nature, and all-year-round stable climate. If this initiative is implemented, more types of tourism will transform the North Coast from a seasonal to year-round destination.

The same concept applies to Ain Sokhna, where the City of Galala is now being developed, transforming surrounding areas from just resorts and seasonal destinations to a fully integrated city with schools, universities and thousands of job opportunities very much like El Alamein City.

If they are to be active all year round, how does Tatweer Misr cater to that?

Il Monte Galala, Ain Sokhna

That’s an interesting question. Fouka Bay and Il Monte Galala are self-sufficient resorts in the sense that they are developed to accommodate tourists and residents, providing them with an extensive range of facilities and services to ensure a certain lifestyle.  Having said that, we cater for the permanent resident by providing facilities unlike any other developer, including schools, infrastructure, medical and office establishments, etc. For us this is crucial–such a long-term plan will see investments by Tatweer Misr in those areas.

What are Tatweer Misr’s future projects in the country? Will it expand to the Middle East?

Tatweer Misr is looking to acquire land varying from 200 to 500 feddans in the New Administrative Capital or in other new cities surrounding Cairo to embark on a gigantic mixed-use project –not just housing- to ensure a quality of life for all, including healthcare, education, entertainment. This is the way we wish to go forward.

In regards to expansion in the Middle East, well–that depends on the opportunities that will be presented and our ability at that point of time to capture those opportunities.

How do you see the future of real estate in Egypt?

As is the case with any major economic decision, the period following such a decision creates ripples that need to settle before we can accurately gauge the impact and what the industry landscape will look like.

For now, the market is waiting for [another] wave of price increases following the pound’s flotation to calm. The stability of the USD:EGP exchange rate will contribute to the stability of the prices of construction materials and the reduction of recent prices.

As developers, we anticipate that prices of units will increase by 20-30%, particularly across new cities. Real estate developers will or have already re-priced their projects on offer. But, in return, the pound’s flotation is also expected to create a better investment climate to attract new investments and increase demand. The liberalization of the exchange rate was a wise step taken by the Central Bank of Egypt (CBE) and will contribute to a return of market stability.   

Shalaby acknowledges the challenges the entire real estate sector faces with all recent economic changes but “we are very optimistic and looking forward to a more stable investment climate within the coming years,” he concludes.


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