Swiss-based Orascom Development Holding has bought a 4.5-percent stake in Egyptian Resorts Co. under a plan to jointly develop resort property on the Red Sea, Orascom said on Thursday.
Orascom Development’s subsidiary Orascom Development and Management (ODM) signed a nine-year agreement with Egyptian Resorts (ERC) to develop 2.5 million square meters (618 acres) of ERC property around the existing Sahl Hasheesh resort.
A joint statement from the two companies said development would include a marina, more than 4,000 hotel rooms and 2,500 residential units, expected by the end of 2012.
"These strategic assets promise to create significant value for the resort in general and help bring added value for both firms," Egyptian Resorts Chief Executive Officer Mohamed Kamel told Reuters.
"ODM will act as the development manager and will also market and sell the residential estate units surrounding the marine area, which is considered as one of the pillars of the Red Sea resort of Sahl Hasheesh," the statement said.
In return, ODM will share revenue and profit under the agreement, Orascom said. It did not specify how much Orascom had paid for its stake.
ERC shares have climbed steadily in the last month. Egypt’s tourism earnings, which dipped 2.1 percent last year do to the global economic crisis, are set to rise significantly in 2010, the tourism minister said in February.
The existing 42-million-square meter Sahl Hasheesh resort, 18 km south of Hurghada, has a total of 1,577 hotel rooms and 679 real estate units, Orascom said.
Earlier this month, Egyptian Resorts said Egypt’s Rowad Tourism had sold a stake of roughly 5 percent in Egyptian Resorts.
