From Cairo to Luxor, the wonders of ancient Egypt have been a magnet for visitors over many centuries, making the North African country one of the oldest tourist destinations in the world. But history isn’t the only draw. Sun worshippers, sailors and divers from around the world flock to the resort- lined Mediterranean and Red Sea coasts.
For all its obvious attractions, Egypt’s tourism sector has taken a battering in recent years for reasons that are well documented, slumping from 14.7 million visitors in 2010 to a low of 5.4 million in 2016, according to data from Colliers International. But there are strong indications that tourists are beginning to return in significant numbers. Arrivals recovered to 7.2 million in 2017, many of them from Saudi Arabia and the rest of the GCC.
Factors contributing to the revival include a cheaper Egyptian Pound combined with a series of government incentives. The Ministry of Tourism has also launched a reform programme that is expected to further revamp the Egyptian hospitality sector.
This is all good news for the construction sector. According to BNC Intelligence, there are over $363bn worth of ongoing construction projects in Egypt, of which approximately 5% belong to the hospitality sector. The Egyptian government sees investment in tourism infrastructure as an important part of its strategy to diversify economic activity and bolster employment.
Greater Cairo currently has an estimated 28,000 hotel rooms and the development of new urban areas in and around the capital is fuelling demand for more hotels and resorts to cater for rising tourist numbers. There is a healthy pipeline of new hospitality projects expected to come on stream in the next few years. BNC Intelligence notes there are approximately $7.9bn worth of projects in Egypt, of which nearly 60% are in the initial stages of construction (i.e. concept and design).
There is firm demand for international hotel brands o ering a world-class service, with major cities expected to over nearly 17,500 branded hotel rooms in the coming year. Prominent hospitality projects across Egypt nearing completion include the expansion of the Sharm El Sheikh Four Seasons Resort (to add 800 rooms) which is scheduled to complete by Q4, 2018 and Phase 1 of City Stars Al Sahel which will o er 2,000 residential suites when completed by the end of 2019. Other notable projects include Swiss Belhotel Marseilia to be completed by Q1, 2019 which will o er 1,200 rooms and The Address Resort Marassi, an ultra-luxurious hotel which is expected to be completed by Q4, 2018.
The hospitality sector performed well in 2017 compared to previous years with an increase in average occupancy rate by nearly 30% in Sharm El Sheikh, Hurghada, Alexandria and Cairo. The Red Sea resort of Hurghada recorded the most increase in occupancy rate in 2017, whereas Cairo recorded the highest revenue per available room. Tourism is expected to pick up further this year, creating fresh demand for new hotels and resorts.
Hospitality is far from the only bright spot for Egypt’s construction sector. A new investment law passed last year is expected to ease business opportunities in the country, cutting down bureaucracy and providing incentives to both Egyptian and foreign investors. The investment law o ers residence permits to foreign investors, the right to repatriate pro ts, to directly import raw materials and equipment, and to export a projects’ output without registering at the Exporters Registry.
What’s more, it sets out an advantageous scal policy, exempting investors from notarisation fees, applying a at rate uni ed custom duty of just 2%, and o ering a tax reduction of up to 80% of the paid-in capital at the start of the project in Egypt for seven years.
There’s no better example of the country’s potential than the plans announced in 2015 to build a brand new capital city on a 700 sq km site around 45km east of Cairo. It is estimated that investments of up to $45bn will be required by 2022 to build the initial stage of the mega-project which was conceived as an answer to the chronic congestion of the capital, currently home to over 20 million residents.
Initially home to government and administrative buildings, New Cairo would be the starting point for the growth of a new modern urban development to meet the needs of the 21st century. The plan has attracted the attention of investors from all over the world including the Arabian Gulf and China.