Tourism development on the Red Sea picks up steam: The Madbouly government is currently studying the potential launch of four-to-five new investment zones along the Red Sea coast, hoping to create similar projects to the multi bn Ras El Hekma project that is expected to attract investment worth c. USD 150 bn as it is built out.

Why the Red Sea? Egypt’s Red Sea coastline stretches more than 1.1k km from the mouth of the Suez Canal in the north to Halayeb on the Sudanese border in the south, offering diverse landscapes that cater to a wide range of commercial, tourism, and maritime activities.

Tourism development takes center stage: An international consultancy firm has been invited to devise a comprehensive master plan for the Red Sea area, a senior Tourism Ministry official told Enterprise. The groundwork laid by large-scale infrastructure projects the government has put in place over the past several years has set the stage for significant investment opportunities, the source added.

More growth needed for the Red Sea: Adel El Masry, an advisor to the Chamber of Tourism Establishments, told Enterprise that while Egypt has made strides in infrastructure projects in the Red Sea, there is still a need for more hotels and tourist facilities to attract additional visitors and generate greater revenue.

Could Berenice’s Ras Banas be the next Ras El Hekma? Investors are eyeing the Berenice area, which lies 140 km south of Marsa Alam, especially after the government built an airport there and the government last week confirmed they are working on an investment plan to offer the Red Sea’s Ras Banas area to private sector players in a transaction similar to ADQ’s Ras El Hekma USD 35 bn agreement. This development could help transform the previously overlooked region into a major tourist and residential hub, according to the official. Jaz Hotel Group CEO and Egyptian Hotels Association steering committee chairman Alaa Akel told us that the area currently lacks any hotels, despite its great potential as a tourist destination. Akel added that offering up Ras Banas for investment is a turning point for the area, poised to give tourism along the Red Sea a major push.

Attention is also on areas of South Sinai: The Sharm El Sheikh-adjacent Ras Gamila is also included in a larger plan to develop luxury hotels and tourist areas in the country, a government source told Enterprise. The Madbouly government set up a ministerial committee earlier this year to select a consultant to manage, evaluate, and market Ras Gamila, which is expected to have an initial sale value of USD 2-3 bn for the development rights, a government source told Enterprise.

Private sector partnerships could build new airports on the Red Sea: The government is planning to offer new airports in the area to private developers through PPP agreements, in a bid to spread tourist attractions beyond Sharm El Sheikh, Hurghada, and Marsa Alam, the senior Tourism Ministry official told us.

Infrastructure projects have been undertaken alongside the push to increase tourism: The Red Sea area is now connected by a state-of-the-art road network, setting the necessary conditions to attract more investments, according to Akel. He also noted that the construction of roads and solar energy facilities in Halayeb and Shalateen has been a key element of the area’s development.

A significant slice of state investments went to developing the Red Sea coast: The government’s investment plan for the Red Sea governorate for the last fiscal year allocated EGP 5.9 bn across 175 projects.

The breakdown: According to a Planning Ministry report, EGP 2.1 bn — 36% of the total — will fund electricity projects. This is followed by EGP 980 mn for local development, EGP 671 mn for housing, EGP 173 mn for higher education, and EGP 88 mn for water and irrigation projects. The remaining EGP 1.2 bn is spread across other sectors. The government’s investment plan also includes 33 housing development projects, with EGP 165 mn earmarked for drinking water and sewage services, as well as 69 local development projects, including road paving initiatives worth EGP 279.8 mn, and EGP 146.5 mn to upgrade electricity networks.

Sustainable tourism is the future: The next decade will see a significant shift in Egypt’s tourism sector towards sustainable practices, which have become a key focus for global tourism, Akel told us, adding that expanding clean energy projects will play a vital role in transforming tourism activities. He argued that the shift to solar energy has been slow, due to electricity subsidies, making the infrastructure for solar power more costly. However, as subsidies decrease, the cost of transitioning will gradually drop, enabling hotels and resorts to adopt clean energy solutions.

There’s still much to be done: Despite these efforts, challenges remain, and Akel emphasized that the government needs to introduce significant incentives to attract private investment in the Red Sea region, particularly through offering land at discounted rates and facilitating investment in hotels, which would increase tourism revenue and FX inflows.

Tax breaks and procedural ease needed: Akel suggested that temporary income tax exemptions — aside from VAT — could serve as an additional incentive to support tourism investment. He added that further easing of security and administrative procedures will also be key to driving the expansion of tourism investments in the region.

All part of a bigger plan: This comes inline with the Madbouly government’s plan to attract 25mn tourists annually by 2030 — a revised version of the previously-set goal of hitting 30 mn tourists by 2028. However, Akel told us that Egypt doesn’t need to attract tourists, but rather it needs to attract more investors to diversify activities and generate natural tourist demand.

Your top infrastructure stories for the week:

  • A local consortium will invest USD 450 mn to build, manage, and operate a 300k square meter dry bulk terminal in Dekheila Port under an initial agreement inked with the Alexandria Port Authority. The project comes as part of efforts to develop the Alexandria Port and boost its capacity to over 120 mn tons a year.
  • The Suez Canal Economic Zone wants to set up a USD 60 mn data center with a capacity of 5-7 MW in partnership with the private sector. The General Authority for Investment and Freezone will promote the project to local and foreign investors and the SCZone will provide all the necessary services for the project in terms of logistics and infrastructure, qualified labor, and a package of incentives.
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