Spurring development

Daily News Egypt
14 Min Read

CAIRO: Ask any random passer by on an Egyptian street if they are familiar with the name Sawiris, and the answer will be more often than not a definite yes – the name is almost as, if not as, well known as the Mubaraks.

The office, from a first impression, is unassuming. Taking a seat in the waiting area, dozens of people moved back and forth on daily errands, chatting congenially. This was, for no apparent reason other than the weight behind the name, in absolute stark contrast to what I had envisioned.

With their prominent position in the Egyptian and regional business world, a mental image had formed of everybody in dashing suits and slicked back hair, palm-pilots at the ready to make a go at the next big venture. Instead, employees were working, but seemed relaxed while doing so; efficiently going about their business but without the overwhelming stress automatically associated with as big a name as Orascom Hotels and Development (OHD).

After waiting 10 minutes or so – I had arrived early – I was ushered into Samih Sawiris’office, chairman and CEO of OHD. Suffice it to say, this office assumed a great deal more than the rest – an extremely comfortable sized room, with some of the best sound-blocking windows in town (the building is in Agouza, which is not typically known for its quiet, serene environment).

Sawiris, with a quick handshake, pointed toward a seat, as he continued on with his conversation in French over the telephone. The conversation was absolutely wasted on me, as my French consists of nothing more than the knowledge of how to order soup.

It’s understandable that the businessman would have so much to deal with – with projects ranging from the ever-burgeoning El Gouna to Taba Heights, Tala Bay in Jordan to The Cove in the UAE, and the large-scale project being undertaken in Oman, Sawiris has a lot on his plate.

His pet project, El Gouna, seems particularly close to his heart when we begin discussing ventures, and even he is surprised by the scope of the hugely popular resort town.

“I mean you have to be absolutely crazy to have [undertaken] a project of that magnitude from scratch in the middle of nowhere, with the resources I had available and with the total lack of experience I started this business with, says Sawiris, a thoughtful look crossing his face. “So, as a matter of fact, I am quite fortunate not to have known the scale that is required when you start something like this, because I guess if I had known, I wouldn’t have had the guts to continue, or to begin actually.

The scale is impressive – the resort town consists of more than 10,000 people, complete with luxury five-star hotels, nightclubs, restaurants, shopping centers and, for the putter in you, a fully equipped 18-hole USPGA golf course.

This, however, is a far cry from the project’s origins, when, according to Sawiris, with only one or two people living in the entire village, it resembled nothing so much as a “ghost town, where people had to drive a good 60 km to Hurghada (round-trip) for simple pleasures, such a fresh piece of bread or the daily newspaper.

“So all of this seemed quite ridiculous in the aftermath, and that’s why by ’93 we knew it had to grow much, much bigger to be able to sustain services and have more of them . says Sawiris. “Anything short of the size of Gouna today cannot be called a self-sustainable entity – you want to call it a town, you want to call it a village, whatever – but for it to be self-sustainable, for its services to be properly functional, size matters.

For someone making such a success out of his projects, Sawiris is surprisingly frank regarding his current work – this job somewhat crept up upon him, replacing his original project.

“Initially after university, I had a totally different career in mind, and I actually did start a different career – I was in the boat building business. I made the first boat factory in Egypt. I was doing quite well for a while, and then I took over the whole marine department of my father’s company . recalls Sawiris. “This thing about tourism and real estate really only started quite late, only 1990. So, from 1978 to 1990, I was doing a different thing .This real estate and tourism business started as an ancillary business, I was just paying attention to it over the weekends when I was in the Red Sea, which I used to like going to anyway.

“As a matter of fact, my family at the time was accusing me of just inventing this business in order to stay an extra day in Hurghada, because at the time we were working six days a week, we had not adapted this Friday/Saturday weekend business, he adds with a laugh.

While recent bombings in Dahab, Sharm El-Sheikh and Taba have threatened to devastate Egypt’s tourism sector, the country is by no accounts a small player in the tourism industry, and while it may not be bringing in the numbers its potential suggests, that has not deterred construction of tourism-related enterprises. Sharm El-Sheikh is an obvious example, with this Sinai city bursting at the seams with hotels and resorts – some find it appealing, while others prefer the perhaps more quaint atmosphere of an El-Gouna, which Sawiris doesn’t see as an isolated project.

“You can have 1,000 Gouna’s in Egypt and you’d still not be swamped with excess, because Egypt is a huge country – it has a more than 3,000 kilometers of beach front, Gouna’s only taking 15 or 20, explains Sawiris. “So why not have another – maybe 1000 is exaggerated – but you could have 100 or 200 Gouna’s all over the place and they will be an amazing addition to the country, because really they are self-sustainable. They occupy 10,000 people, these 10,000 people in return generate two to three jobs each indirectly, so that means you could have 30-40000 people living in each place off the income that has been generated by a project like this, causing the government zero cost.

With OHD’s success in Egypt, the next step was obvious – go abroad. Even with all of its problems, the region of the Middle East is impossible to pass up for real estate and tourism developers, as its fertile grounds and incredible natural beauty continue to draw them in. OHD is no exception.

The first phase of the Tala Bay project in Jordan, which looks out over the Gulf of Aqaba, was concluded in 2005, with 157 residential units on the marina in the project. The massively invested in UAE is also targeted by OHD, with The Cove in Ras El Khaimah seen as pristine property by the CEO.

“I mean it was very obvious when we went to Ras El Khaimah. We saw an opportunity that was already there but nobody picked it up because there are just not enough experienced players to recognize potential when it’s well hidden, says Sawiris. “But having been in this business for so long, it took me five minutes to decide that Ras El Khaimah is the best place in the Emirates to invest in a project and sure enough it was a big success, because of the choice of location and the timing, and that’s something you learn with time.

Although Sawiris was speaking highly of The Cove, he was seemingly giddy with the prospects offered by Oman.

“Oman is to me the most amazing hidden jewel in the Arab peninsula. For those who don’t know, Oman has a very old history of culture and it has been a nation that was ruling most of the Indian Ocean for many hundreds of years. Zanzibar used to belong to them, parts of Pakistan used to belong to them, so they were quite a sophisticated, cultured nation, says Sawiris.

“Nature there is mind-boggling. The Indian Ocean, obviously, is no comparison to the Gulf, they have beautiful islands, they have a very open attitude toward people from other countries and other religions and other nations because they themselves consist of many different tribes and religions, adds Sawiris. “Ultimately, it’s a much more sophisticated place than anywhere else on the peninsula. Plus the natural beauty of that place makes it just a matter of time before this becomes the number one destination for anybody who wants to travel to the Middle East.

For many Egyptians not thi
nking about resorts such as El-Gouna, or traveling to Oman or the UAE, the North Coast has always been their fallback. From chalets to luxury villas, properties on the coast are always a hot commodity, and rumors are continuously swirling regarding the next big development to take place there.

Sawiris, however, plays it cautiously.

“My experience teaches me that you must always improve on what you’ve done before, or leave it alone, because you’ll just burn yourself, burn your fingers and burn your image and your reputation and so on, explains Sawiris. “And people expect you to do better. So the high level of expectation, when we started talking about the North Coast, was mind-boggling. People were really talking as if we’ve already finished the project and we’re selling it and there were rumors all over town. While actually to me it was just the first time I get myself interested in the North Coast to a level where I said ‘OK, I want to do a project there.’ But then if I don’t find the right size and the right terrain and the right formula, I’d rather not do it.

The growth of residential tourism is also a hot topic among developers, who are seeing more and more people from areas such as Europe choosing to purchase a place to call home during the winter months, where Egypt’s much more temperate climate is at its most attractive. According to Sawiris, they were the first to sell to foreigners in Egypt on the Red Sea 10-12 years ago, which leads to people moving here and investing in Egypt not only where they purchased, but in the nation as a whole.

The investment climate is much more favorable now as well, says Sawiris, who describes the cabinet in place since 2004 as “people who generally believe in the private sector [and] not just claim it, and have also managed to give us the confidence that they’re open for business.

With the more appealing investment climate and “with the recovery of tourism and the recovery of the culture as a whole, we finally managed to put everything in proper order in-house and pay some attention to the foreign opportunities that came to us, he adds.

Judging by the success of their in-house projects, and the attention their foreign ventures are garnering, that sounds like a solid, business decision.

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