Cairo – Decypha: With a struggling tourism sector, it is quite a challenge for the Egyptian government to attract a steady stream of tourists, let alone foreign investments. In fact, investors have been raising significant issue with the increasing financial obligations as land plots were valued by the US dollar, a currency that is growing in value against the Egyptian point (EGP) monthly.
To delve deeper into the true potential of the state’s efforts to boost both investment and tourist flow into the country, Decypha sat with the Head of the General Authority for Tourism Development, Serag El din Saad, for an interview.
When will the TDA offer land tenders for investors? And where will they be located?
The authority is working on launching a land tender within the coming two months. We will offer plots in different areas including the Red Sea governorate, South Sinai governorate, and the North coast, covering both the east and the west areas of the Mediterranean coast.
In terms of size of land, plots offered will vary greatly beginning from 50 thousand square meters to around 5 million square meters.
New land tenders, commissioned by the authority, will focus more on compounds rather than hotels, with the exception of the North Coast area which requires a large number of hotel rooms to accommodate seasonal tourist inflow.
What is the price level of the upcoming land offering?
Meter prices will be set and agreed upon with the General Authority for Investment (GAFI), following the issuance of the new investment law, currently pending approval of the House of Representatives.
The new investment law aims to provide a package of incentives and guarantees for local and foreign investors, in order to inject new capital into different sectors.
It is worth noting that investors for upcoming land tenders will be more fortunate, as land will be valued in local currency, rather than US dollar. Basing land value against the dollar has caused significant problems for investors, especially in light of the of the Egyptian pound’s (EGP) fluctuating exchange rate after its liberalization in November 2016.
In terms of payment in EGP, will the decision include previous investors and due installments?
Any previous due installments from investors will be collected in dollars. For any new tenders, payments will be in EGP.
What about foreign investments, specifically from the GCC area?
Recently, Egypt’s tourism sector has attracted significant interest from GCC investors, mostly in response to the sale boom in touristic real estate.
We expect a strong demand from Arab investors for mega projects of more than one million meters in size, as projects of that size tend to include both the hotel component as well as a touristic compound.
Currently, we are in negotiations with GCC investors for mega projects in the Red Sea and the North Coast. It is expected that these projects will secure thousands of jobs.
Who are the GCC companies the TDA is currently in negotiations with?
We will announce this at the right time, but I would like to tell you that the Ministry of Tourism has strong offers from GCC investors to set up giant tourism clusters during the coming period.
Gulf investments in Egypt’s tourism sector are still weak and accounts for not more than 4% total investments in the sector, what is your view in that regard?
The Ministry of Tourism has recently adopted a new method of marketing tourist land plots, as opposed to just offering them and waiting for investors.
We have reached out to companies based in the GCC region, and as mentioned we are currently negotiating deals for land plots of different sizes, ranging up to 2 million square meters.
We have huge Gulf investments in South Sinai, specifically from Saudi investors, one particular investors is currently developing an area of nearly 8 million square meters. It is expected to be one of the biggest tourist gatherings in South Sinai after completion.
The local tourism sector is currently facing a decline in foreign inflows. How do you respond to stakeholders suggesting a pause in land tenders?
The Egyptian tourism sector is, despite the crises it has experienced over the past period, strong and has not collapsed. These crises have made the sector stronger and it will recover again.
I am confident that growth rates in the sector in the coming period will exceed 20%, which is very large compared to other markets. To ensure that we need to secure investment inflows.
The new investment law, will play a major role in attracting foreign investments, especially as tourism projects have been added as one of the main sectors benefiting from the incentives and guarantees provided by the law.
I expect that this year will be much better than the above, in light of the efforts of the Ministry of Tourism and the government to fully support the sector.
Despite the past six years, the tourism sector is capable of rebounding and recovering. Proof of that was in our ability to secure contracts with investors last year, which shows that investors still have confidence in the sector.
As for saying that there are hotel rooms under construction that was supposed to be completed, I say that the lack of land tender offering will increase unemployment, and the Authority is seeking to find new tourist products.
Are there new land tenders for the Tur Ras Mohammed area?
This is a strategic area got the TDA; according to studies carried out by global research houses, it is suitable for positioning as a touristic spot for the elite and the world’s wealthy.
The authority has a plan to connect the two coasts of the Gulf of Suez with yacht ports, creating a giant tourist area capable of attracting such level of tourists.
Our studies say that investment should not exceed two units per acre, indicating the need for specific quality of investment.
Moving forward
As the authority invests significant efforts to attract foreign investors, promote new land plots to boost financial inflow, and ease payment issues for future investors. Current developers in the tourism sector face many challenges to recover alongside the industry, a fact that is yet to be addressed by the state. It is however, the view of the government as a whole that boosting investment flow through the country’s sectors will ideally address most existing issues current investors are facing.
By Decypha Editorial Team
