The Ras El Hekma megaproject on Egypt's Mediterranean coast is poised to become a major coastal city, with a master plan that includes five marinas and significant commercial and tourism infrastructure.
In early 2024, Egypt and the UAE signed a historic $35 billion FDI agreement, the largest in Egypt’s history. The deal, led by Abu Dhabi-based sovereign investor ADQ, is designed to develop Ras El Hekma into a major urban center on Egypt’s North Coast. Key details include:
$24 billion will be invested by ADQ to acquire development rights for the 40,600-acre land.
An additional $11 billion will be allocated for other prime projects across Egypt.
The project is expected to attract a minimum of $150 billion in further investments during its various implementation phases, according to Egyptian Prime Minister Mostafa Madbouly.
Ras El Hekma, located 350 kilometers northwest of Cairo, is characterized by its turquoise waters, white sandy beaches, and rich agricultural surroundings. Previously untouched, it is now set to undergo rapid urbanization, transforming into a large coastal city that will include:
Five marinas and commercial port facilities, boosting Egypt’s maritime tourism potential.
Residential districts, tourist resorts, and prestigious international hotels.
Retail and entertainment zones, hospitals, schools, and universities to support a thriving urban population.
A central business district designed to attract global companies and investors.
Sustainable development plans in collaboration with the Egyptian government and UN-Habitat, positioning Ras El Hekma as a model for future coastal cities.
The collaboration is primarily led by Abu Dhabi-based sovereign investor ADQ and Egypt’s New Urban Communities Authority (NUCA), with significant contributions from other prominent real estate and construction firms.
Infrastructure Demands and Challenges:
Despite the promise of significant economic benefits, the Ras El Hekma project faces substantial infrastructure challenges due to its remote location. Essential infrastructure investments include:
Water supply: The region requires new drinking water and wastewater treatment plants. Water may need to be pumped from the Nile, 300 kilometers away, or a costly seawater desalination plant must be built.
Transportation: The development relies on the new $4.5 billion Ain Sokhna-Matruh high-speed rail line, currently under construction, to bring people to the coast. Ras El Hekma is also expected to depend on the $30 billion Dabaa nuclear power plant for energy.
Expropriation and compensation: Local residents, including olive farmers, have been displaced to make way for the development. Their compensation and relocation efforts remain a point of contention.
Economic Opportunities and Risks:
While the Ras El Hekma project is hailed as a potential game-changer for Egypt’s economy, questions remain about its long-term viability and economic impact. The project is expected to create 750,000 jobs and generate substantial foreign currency inflows, but several risks need to be considered:
Short-term economic relief: The deal provides immediate relief for Egypt’s foreign currency crisis, which was exacerbated by excessive state spending. The cash infusion from the UAE has already allowed Egypt to meet key conditions set by the International Monetary Fund (IMF), including a 40% devaluation of the Egyptian pound.
Real estate dependency: While the project may generate significant returns in the short term, real estate is not a strategic long-term investment. It does not contribute to Egypt’s foreign currency balance like industrial production or export-driven sectors. Many of the investments made in Ras El Hekma will be in local currency, and a large portion of the sales—whether of luxury chalets or tourist facilities—will likely be to Egyptians.
Revenue uncertainty: The government has not disclosed how much profit the Ras El Hekma project is expected to generate. While Prime Minister Madbouly has cited a projected $150 billion in investment, the fluid nature of this figure makes it difficult to gauge the actual financial returns.
About The Ocean Edition:
The Ocean Edition is a boutique advisory firm focused on building the next generation of smart and sustainable coastal cities. Our expertise lies in blue economy, technology and innovation and Gen Z travel and tourism trends. We work with leaders in public and private sector to transform coastal regions into thriving, future-ready hubs of innovation and sustainability, providing tailored consulting services, business development, and technology integration.
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