CAIRO: Developer Egyptian Resorts (ERC) plans to launch its delayed Sawari project in the second quarter of 2012, the firm’s chief executive officer said on Wednesday.
ERC, taking a hit from political turmoil after president Hosni Mubarak was ousted, is optimistic that the country’s economy will rebound in the long term, even if it expects volatility throughout 2012, Mohamed Kamel said.
The firm is in a partnership to develop land with Orascom Development Holding (ODH), for the Sawari project, a mixed-use development that will include a marina on a 2.5 million square meter plot at Sahl Hasheesh on the Red Sea.
It expects to generate sales of LE 2.2 billion ($369 million) from the first phase of the project.
"Our Sawari project is on the top of our priorities and we will invest most of our time, effort and resources into it for next year. Our firm’s liquidity allows us to start that," Kamel told the Reuters Middle East Investment Summit in Cairo.
The firm had previously said it would start construction in the fourth quarter of this year. Kamel said he anticipated an investment cost of LE 1.7 billion.
"The licensing process has been slower than usual, which was expected but we remain on schedule for construction and we are targeting a Q2 2012 start," Kamel added.
"We have not met our sales targets for 2011 but believe in the Sawari project’s superior offering that will result in a recovery earlier than the market’s performance," he added.
Decision was wrong
ERC, like other developers in the Arab world’s most populous nation, is reeling from challenges to state land purchases that started before the uprising at the start of this year and have since gathered pace.
In April, the Tourism Development Authority retracted approval for the sale of its 42-million-square meter Sahl Hasheesh plot, 18 km (11 miles) south of Hurghada and ERC’s main project. The firm is contesting the decision.
"I am optimistic about resolving the dispute. The decision of withdrawing the land was wrong. We are in dialogue with the authority to convince them of our right to the land," he said.
"The government has to respect its contracts so that the economy and investment come back once again," he added.
Kamel said Egypt’s economy and its tourism sector were capable of rebounding from the turmoil.
"It is unquestionable that the underlying fundamentals of the Egyptian economy are sound, backed by strong domestic demand and relative liquidity in the financial system, offering attractive investment opportunities in the long term," he said.
Widening graft probes and multiple cases that have brought real estate companies, including Talaat Moustafa Group and Palm Hills, former government officials and business executives to court have paralyzed investment.
"I think investors are suffering from bipolar swings in sentiment toward investing in Egypt. One day they are euphoric, the next they are not even considering it," he said.
"This is completely natural given the current volatility in the government’s policy-making," Kamel said.
The company has not sold any plots of land since the third quarter of 2008, when the global financial crisis hit appetite for big real estate purchases in Egypt.
Kamel said it was not expecting any for the rest of the year, but that sales in 2012 were a possibility, if the economic situation stabilized.