The cabinet announced a new North Coast real-estate deal in collaboration with the private-sector Talaat Moustafa Group (TMG) on Tuesday that is expected to generate billions of pounds in revenue.

The project, called South Med, will be developed over 23 million square metres of land with investments totalling LE1 trillion ($21 billion). TMG has vast experience of launching modern, integrated, smart cities and hotels in Egypt.

The North Coast, overlooking the Mediterranean Sea, has been designated for real-estate and tourist development, capitalising on its year-round temperate climate, pristine beaches, and calm seas, making it particularly attractive during the summer months, Hisham Talaat Moustafa of TMG said at a press conference.

The South Med project will include a large marina for yachts and cruise ships, positioning Egypt as one of the most attractive tourist destinations in the Mediterranean region.

Following the announcement of the Ras Al-Hekma deal, also on the North Coast, a few months ago, Decree 1508/2024 ordered the construction of a port equipped especially to host yachts. The move indicates the government’s desire to capitalise on major attraction hubs to maximise tourism, entertainment, and service revenues.

Moustafa said that the South Med project will be implemented to the highest international standards in order to match the most luxurious destinations in the northern Mediterranean, such as in southern France, Italy, Spain, and Greece.

It is expected to attract revenue in foreign currency through the sale of real estate and foreign investments and is anticipated to increase the flow of tourists into Egypt.

It will include rental programmes intended to encourage international hotel-management companies to manage units all year round to ensure their continued occupancy and not just during the peak months of July and August.

The project is expected to attract high-spending tourists from Europe and the Arab world, largely due to its proximity to the European countries. It is situated at some three hours flight time from Europe or the Gulf and a 15-minute drive from the nearby Alamein Airport.

According to projections, the project should generate LE1.6 trillion in revenue ($35 billion), making it the largest integrated real-estate tourism project in Egypt.

Expected revenues will have a direct impact on the national economy, contributing LE2.4 trillion to GDP. Every LE1 spent on buying real estate generates LE1.5 of GDP, due to the real-estate industry’s connection with more than 100 other feeder industries, whether directly or indirectly.

Mahmoud Gad, a senior analyst at the Arab African Company, said projects established as partnerships between the state and the private sector have proven to be successful.

The cost of developing a major project can be burdensome for developers, particularly if they have to meet land costs. Under a private-public partnership, the state can provide the land for the project, with the partnership model allowing it to benefit from greater revenues as the project progresses, Gad said.

The nearby Alamein project saw the state transform the area from a summer retreat to a year-round destination in partnership with the private sector, for example.

The prices of units in North Coast projects depend on factors including the exchange rate, building material costs, interest and inflation rates, and the relation between supply and demand.

If other factors remain stable, prices primarily depend on supply and demand, Gad said.

If other leading companies establish projects on the North Coast, the appeal of the area will increase, encouraging more large developers to invest and clients to buy, he added.

* A version of this article appears in print in the 4 July, 2024 edition of Al-Ahram Weekly