CAIRO: Jordanian-based Shaheen Group unveiled plans Wednesday to construct a $2 billion (LE 11.5 billion) resort in Sahl Hasheesh near Hurghada on the Red Sea. Construction on the project, aimed to attract the rich and the elite of Europe and the World, as stressed by Shaheen officials, will begin in early 2007 and last for three years.
The resort, to be built on 3 million sq meters of land acquired by Shaheen from the Egyptian Resorts Company, will include a seven-star hotel, 18-hole golf course, 300-yeacht marina, shopping and health centers, and more than 700 housing units including luxury apartments, villas and palaces.
Shaheen officials declined to disclose the price paid for the land, saying it amounted to a small portion of total investment.
This project will attract the upper echelon of celebrities and businessmen of Europe and the world, says Aahed El Sokhn, Shaheen communication and public relations manager. Of course everyone is welcome to buy, but our marketing strategy will focus on Europe, especially the North, where we believe our clients are looking for a second home relatively close to home where they can enjoy all that Serrenia has to offer in terms of luxury and quietness.
El Sokhn says the project will financed using company capital, pre-sale proceeds as well as capital from possible future partnerships, although none exist now. The company plans to borrow less than 15 percent of the project s costs, according to Chief Financial Officer Andrew Shephard, according to current plans.
HC Brokerage Tourism Analyst Germaine Benyamin says Serrenia adopts many of the concepts employed by El Gouna, a resort developed by Orascom Construction Industries (OCI), but focuses its marketing on a very specific client base. The strategy has worked for OCI, she says, so it should work for Shaheen. Nearly 40 percent of El Gouna homeowners are from Belgium, Italy, Denmark, Switzerland and England, according to OCI figures.
The second home concept has worked for El Gouna, says Benyamin. I think that s what Serrenia is trying to do but while targeting higher-class clientele.
Overall, Benyamin says the continuing construction boom, especially in the tourism industry, is already resulting in an oversupply of rooms relative to the number of tourists visiting the country every year.
Already there are 131,000 rooms under construction. Occupancy rates are around 80 percent of the current stock of 148,000 rooms, according to HC. Benyamin says the figure of rooms under construction does not include recently announced projects such as Serrenia and Sidi Abdel Rahman to be developed by Emaar Misr.
The Ministry of Tourism maintains its efforts to boost investment in the construction sector align with the government s efforts to increase the number of tourists visiting the country to 16 million by 2020 by investing in infrastructure projects such as Cairo International Airport Terminal 3.
Benyamin adds the project should gain wide visibility despite similar resorts which have been created in the Gulf, such as Al Nakheel in UAE. Al Nakheel is a multi-billion dollar resort now under construction off the coast of Dubai on man-made islands in the shape of palm trees. With the project scheduled for completion in 2009, 80 percent of its units remain unsold and its creator, Nakheel Development Group, is facing numerous allegations of environmental violations by environmental groups.
Still, Benyamin says although most studies show the tourism market is facing a possible oversupply crisis, investors will continue to come to Egypt in the near future because of a combination of factors that are hard to come by anywhere else in the Middle East.
I expect more investors will be looking to Egypt for tourism projects because the land is cheaper here, labour is cheaper, and we have the beaches, says Benyamin.
