Business | Features
Channel Sponsor
Funding could slow down
Egypt, the most diversified economy in North Africa, has long been a recipient of Gulf investments in a range of sectors such as telecoms, finance, industry and real estate.
- By Heba Saleh, Financial Times
- Published: 23:16 December 3, 2008
Egypt, the most diversified economy in North Africa, has long been a recipient of Gulf investments in a range of sectors such as telecoms, finance, industry and real estate.
More recently, however, investors from Gulf Cooperation Council (GCC) countries have been probing opportunities and announcing big projects, some in industry and infrastructure but most in real estate and tourism developments, further west in Libya, Tunisia, Algeria and Morocco.
In the past three years, Gulf giants including Emaar, Damac, Qatari Diar, Sama Dubai and other GCC firms have announced billions worth of property developments across North Africa.
Investment bankers say the current financial crisis is likely to force the scaling down of some of these mega-projects but, even before the global credit squeeze, progress appeared slow on some of the more ambitious ventures.
In Libya and Algeria, some developments have stalled. Part of the reason is that while the countries of North Africa, with their predominantly young populations and massive pent-up demand for housing and commercial property, are considered attractive for real estate development, their economic systems are at different stages of liberalisation.
Tunisia, Morocco and Egypt have opened up their economies to attract foreign investment but their richer neighbours, Libya and Algeria - both hydrocarbon producers - still have more tightly controlled systems that are harder to navigate for investors from abroad.
Libya continues to attract interest, and the Bahraini investment bank Gulf Finance House recently announced plans to start work on its Energy City project, a $5 billion (Dh18.39 billion) economic zone for oil and gas companies operating in the country.
GFH is also in Tunisia with a project for a financial park and property development which it says it should start early next year. It should contain a corporate centre, an investment banking centre and an exchange. "Our projects provide essential modern infrastructure with a business theme to attract foreign investment," says Alaa Al Yousuf, chief economist at GFH.
Progress
In Tunisia, Sama Dubai said in September it had started work on the first stage of a $25 billion project called "Mediterranean Gate", which company executives say should eventually create 130,000 jobs.
Other projects announced in Tunisia include Tunis Sports City, a $3 billion project from the Bukhatir Group of Sharjah, and the $10 billion Bled Al Ward, a mixed-use development to be built by Al Maabar of Abu Dhabi. Qatari investors are building a $600 million coastal complex near Tangiers in the north.
Dubai Holding has been transforming the scenic estuary of the Bouregreg river in Rabat into a pleasure zone with the construction of a marina and promenades. There are also plans for hotels, shops, restaurants and housing.
Experts now say the global crisis and the decline in oil prices will translate into reduced investment flows from the Gulf to Egypt and the Maghreb countries. But they argue that, while investment in real estate and other projects is likely to decline, it will not dry up.
"I think what will happen is that capital will be more selective and more demanding in terms of returns," says Yaser Jamali, executive director for Egypt of Abraaj Capital. "[But] we will still see a flow of capital from Gulf companies looking to grow regionally rather than internationally as the growth levels offered by Egypt and North Africa are much higher than in Europe and the States."
Share this article
More from Business Features
More from Business
Popular in Business
-
Budget travel
Airlines in the region
Take a pictorial look at some of the budget airlines in GCC
Business Editor's choice
-
Experts seek solutions to global gloom
Suggestions formulated in Dubai will feature in next year's WEF
-
Qatar benefits from diversification
Doha's readiness to look beyond hydrocarbons as a growth engine bodes well
-
When the Web lives worldwide
Cutting-edge firms are building massive data facilities all over the globe
