Change of heart in the Gulf?

Safeya Mounir , Tuesday 28 Nov 2023

Two business gatherings held last week indicate that Gulf investors have regained interest in the Egyptian economy, reports Safeya Mounir

Gulf investors


Gulf investment in Egypt is picking up momentum. Last week, several Arab business delegates converged on Egypt to attend the Gulf-Egyptian Business Forum, held for the first time in Egypt.

A meeting of the Saudi-Egyptian Business Council was organised in the country during the same week. The outcomes of the two events included a host of projects and acquisitions.

An Emirati investor expressed an interest in acquiring the Misr Life Insurance Company, an affiliate of the Holding Company for Insurance, which was listed in the government’s to-be -privatised list announced earlier this year.

The company was recently added to the assets of the pre-IPO (initial public offering) fund affiliated to the Sovereign Fund of Egypt. According to press reports, the UAE investor has proposed buying 100 per cent of the company’s shares from the Sovereign Fund of Egypt to expand operations in the Egyptian market.

The Saudi Al-Lami Group is planning to invest $500 million in Egypt over the next two years, focusing on the tourism and real-estate sectors, it has been announced. Mohamed Talaat Al-Lami, the group’s chairman, said it is working on opening a 500-room hotel in Sharm El-Sheikh in 2024 with an investment worth $50 million.

Saudi private-sector investments in Egypt have reached $35 billion across various sectors such as agriculture, real estate, banking, energy, and fertilisers, said Badr Al-Ameri, chairman of the Saudi-Egyptian Business Council.

Al-Ameri was speaking last week at a press conference during the visit of the Saudi delegation to Cairo led by Minister of Commerce Maguid Abdullah Al-Qassabi.

He said that his group has obtained a real-estate development licence for 85 feddans of land in the green belt area in 6 October city to build a residential and commercial project with an $100 million investment. Construction is set to commence in the first half of 2024, Al-Ameri added.

The Al-Lami Group owns three hotels in Sharm El-Sheikh with a total capacity of 2,000 rooms and overall investments in Egypt of $3 billion.

FAS Real Estate, part of the Saudi Fawaz Alhokair Group, said it intends to inject $1.5 billion in new investments into Egypt in 2024. Turki Alhokair, the company’s CEO, stated during a press conference at the Ministry of Trade and Industry that the new investments would target the energy, real estate, and infrastructure sectors.

FAS’ investment portfolio in Egypt is estimated at $5 billion.

Over recent months, foreign and Arab investors have been holding back on any planned investment in Egypt in anticipation of a pending devaluation of the pound.

The oil-rich Gulf countries made it clear on several occasions last year that they prefer to support Egypt by investments rather than aid provided that the country takes serious steps to stabilise its foreign-exchange regime.  

However, the war on Gaza and the fear of regional instability seems to be changing the stance of the Gulf countries towards investment in Egypt.

Monica Malek, a senior economist at the Abu Dhabi Commercial Bank (ADCB), told Reuters last week that she has felt a change in sentiment in the Gulf towards Egypt, as compared to its reluctance to prop up the economy before the Gaza war.

Two Cairo-based bankers told the news agency that they had reports that the Gulf countries were discussing a possible financial rescue package involving further cash deposits and support for Egypt’s currency after any further devaluation.

Saudi Arabia, the UAE, Kuwait, and Qatar have a total of $29.9 billion on deposit with Egypt’s central bank.

Many analysts believe that another devaluation of the pound could take place immediately after the presidential elections scheduled in December.

Mohamed Hassan, managing director of Alpha Financial Management, believes the announcements of new deals and investments by Gulf investors suggest an imminent floatation of the currency.

Pledges to invest will take time to materialise, he said, ruling out that they will take place before the devaluation. Gulf investors favour the Egyptian market due to the strong relations between Egypt and the Arab countries, the high return on investment in Egypt, and the vast opportunities Egypt offers across its diverse economic sectors, he added.

According to Muharram Helal, chairman of the Egyptian-Qatari Business Council, Gulf investors are attracted to Egypt due to its political and economic stability as well as the high returns on investment in the Egyptian market, the largest in the region.

Egypt has a large number of trade agreements with different countries. Its recent entry into the BRICS agreement at the beginning of the year further enhances investors’ interest in the country.

“Gulf investments in the country are currently focused on the real-estate sector, which yields substantial profits for investors but does not significantly contribute to the economy or boost production.” said Mohamed Geneidi, a member of the Egyptian-Saudi Business Council.

The positive side is that the lucrative returns realised from real-estate investments make most investors less concerned about the timing of the floatation of the pound and more ready to continue their investments, he added.

* A version of this article appears in print in the 30 November, 2023 edition of Al-Ahram Weekly

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