The United Arab Emirates (UAE) has finalized a deal to purchase the coastal town of Ras al-Hikmah in Egypt for $35 billion. According to Egyptian Prime Minister Mostafa Madbouly, the UAE will make an upfront payment of $15 billion, with the remainder to be paid over two months. This deal is considered the largest foreign direct investment in an urban development project in Egypt’s modern history.
Ras al-Hikmah, located approximately 200 km west of Alexandria, will be developed into a comprehensive town featuring residential neighborhoods, tourist resorts, schools, universities, an industrial zone, a central financial and business district, an international marina for tourist yachts, and an international airport.
The town is situated in an area known for upscale tourist resorts and white sand beaches, popular with wealthy Egyptians during the summer months.
Egypt has been grappling with a prolonged economic crisis, including a chronic foreign currency shortfall, which has led to sustained pressure on the Egyptian pound, government spending, and local businesses.
Inflation reached record levels, the debt burden increased, and the shortage of foreign currency deepened due to lost revenues from the Suez Canal after attacks on shipping in the Red Sea.
The International Monetary Fund (IMF) and Egypt have been in talks to boost Egypt’s IMF loan program, and discussions are reportedly making excellent progress. Egypt is seeking a comprehensive support package to address economic challenges, including those arising from the conflict in Gaza.
In recent years, Egypt has received significant financial support from wealthy Gulf states, but this source has diminished as Gulf nations link support to free-market reforms and seek profitable investments in Egyptian assets. Despite economic challenges, President Abdel Fattah al-Sisi continues to emphasize the importance of mega-projects in attracting foreign investment and creating employment opportunities.
