Abu Dhabi in talks to develop $22 billion Egypt beach strip

Abu Dhabi is in advanced talks to buy and develop premium land on Egypt’s Mediterranean coast, a potential multi-billion-dollar deal that could boost the North African nation’s troubled economy and help alleviate its foreign exchange crisis.

An Egyptian official on February 7 said a United Arab Emirates consortium had been selected to work with local partners to develop Ras El-Hekma, an area about 350 kilometres (217 miles) northwest of Cairo, Bloomberg reports.

In an interview with broadcaster CNBC Arabia, Hossam Heiba, the chief executive officer of the state-run General Authority for Investment and Free Zones, said the initial estimate for the total project was $22 billion and an agreement is expected soon. He didn’t provide further details, nor name any companies or entities.

People familiar with the talks told Bloomberg that the emirate of Abu Dhabi is involved and Egypt may retain ownership of about 20% of the vast 180 million square-meter territory, three times the size of Manhattan. The minority stake would include a share for the Talaat Moustafa Group, a real estate developer, and some Egyptian state entities, they said, asking not to be identified as the discussions are ongoing. No final decision has been taken.

Egypt’s dollar bonds surged on February 8 to trade at the highest level since March. The notes due in 2047 climbed more than 3 cents to above 66, best performing dollar bond among emerging markets.

The UAE is a federation of seven emirates, with Abu Dhabi as its capital. If the deal goes through it would deepen ties between Egypt and the UAE, which has been a key backer of Egyptian President Abdel-Fattah El-Sisi and previously offered economic support in the form of investments or other assistance.

Abu Dhabi’s media office and Talaat Moustafa Group couldn’t be reached for comment.

Such a deal would be a boon for Egypt’s efforts to tackle its worst foreign-exchange crisis in decades. The country is expected to enact a currency devaluation soon — its fourth since early 2022 — and an infusion of hard currency would ensure it has the liquidity to manage a successful flotation, meet importers’ demands for dollars and quell the local black market.

A currency adjustment is also a key factor in Egypt’s ongoing talks with the International Monetary Fund on a loan boost that may bring in other partners and secure some $10 billion in financing.

The IMF’s managing director, Kristalina Georgieva, on Feb. 1 said the lender is “very close” to agreeing on a new financial package, adding she’d met partners of Egypt, including those in the Gulf.

The average land price on Egypt’s North Coast, a top summer vacation spot for mainly domestic visitors, is between $100-$120 per square meter when it comes to larger blocs, according to the people. That would be calculated at a minimum of $18 billion, going by the size of the stated territory.

It isn’t clear whether Abu Dhabi would provide the funds from the possible deal as a single sum or pay a certain amount upfront and the remainder in installments.

Egypt’s government said on February 8 a committee is studying “investment offers for important projects that are set to generate large resources of foreign currency,” without providing details.

In 2022, the UAE deposited $5 billion in Egypt’s central bank, and Abu Dhabi wealth fund ADQ agreed to a $2 billion deal that included buying about 18% of Egypt’s largest listed lender, Commercial International Bank.

Last year, ADQ spent $800 million on minority stakes in Egyptian Ethylene and Derivatives Co., oil firm Egyptian Drilling Co. and Egyptian Linear Alkyl Benzene, a petrochemicals producer. A UAE firm also bought a 30% stake in Egypt’s largest tobacco company for $625 million, while Egypt in September signed a local-currency swap agreement worth around $1.4 billion with the Gulf country.