A UAE consortium led by ADQ, a sovereign investment fund based in Abu Dhabi, signed a landmark agreement with Egypt on Friday to invest $35 billion in Ras El-Hekma, representing the single largest foreign direct investment in Egypt.
ADQ, one of the region’s largest holding companies with a broad portfolio of major enterprises spanning key sectors of Abu Dhabi’s diversified economy, will acquire the development rights for Ras El-Hekma for $24 billion and will also convert $11 billion of deposits that will be utilised for investment in prime projects across Egypt.
The mega project, hailed as a new chapter in bilateral relations, could eventually attract as much as $150 billion in investments, according to Egyptian Prime Minister Mostafa Madbouly.
The UAE’s sovereign fund has established an office in Egypt to build on its commitment to investing in the country’s economic growth. The vision is to develop Ras El-Hekma, a region on the Mediterranean coast 350 kilometres northwest of Cairo, into a world-class holiday destination, financial centre, and free zone, spanning over 170 million square metres and boasting state-of-the-art infrastructure.
The city will feature investment zones, technology and light industry, amusement parks, a marina and an airport as well as tourism and residential developments. Work is likely to commence in early 2025.
Under the agreement, the Egyptian government will retain a 35 per cent stake in the development. “With this signing, a new chapter begins in the long-standing bilateral relations between our two nations. Underscored by mutual respect and trust, this investment demonstrates the UAE’s commitment to supporting the government of Egypt in realising the abundant potential of the local economy,” Mohamed Hassan Alsuwaidi, UAE Minister of Investment, said.
“As a large-scale infrastructure project, the planned Ras El-Hekma development will foster widespread impacts across multiple sectors, be a catalyst for job creation and attract significant additional foreign direct investments in the years to come,” said Alsuwaidi. “This investment underscores our commitment to developing Ras El-Hekma into one of Egypt’s most attractive coastal destinations through the enablement of mega-infrastructure and development projects, working with partners such as Modon Properties and Talaat Moustafa Group, which will deliver value across multiple sectors of Egypt’s vibrant economy.”
Egypt’s North Coast has garnered tremendous interest from global investors and tourists, showcasing its aptitude to benefit from international partnerships. Ras El-Hekma will be a world-class destination in the Mediterranean with unmatched attractions, including hotels, yacht marinas and entertainment facilities.
Madbouly told a press conference that the deal would bring in $15 billion in the next week and $35 billion over two months — though he said $11 billion of that money would be converted into Egyptian pounds from existing UAE dollar deposits in Egypt’s central bank.
The announcement of the Ras El Hekma deal showed that Egypt was “too big to fail”, said Viktor Szabo, portfolio manager at Abrdn in London.
“This is a good development and will help with growth for sure, but Egypt will see the benefits more over the medium term,” he said.
The economic crisis has increased pressure on Egypt’s leadership to scale back on massive infrastructure projects and reduce the dominance of the state and the military in the economy.