Saudi and Egyptian firms sign $450 million hotel deal

The Swiss hotel and resort brand, owned and represented by Saudi Hospitality Development Group (HDG), aims to build eight hotels in Egypt as part of a management deal with Tharawat International Investment Corp. (HDG photo)
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Updated 25 February 2020

Saudi and Egyptian firms sign $450 million hotel deal

  • Total Saudi investments in Egypt have reached $54 billion

CAIRO: Egypt’s Tharawat International Investment Corp. has signed a $450 million deal with the Saudi Hospitality Development Group (HDG) to manage Swiss International.

HDG owns and represents the Swiss hotel and resort brand with its three brands: Swiss Spirit, Swiss International and Royal Swiss.

“Many of our investors are interested in investing in Egypt and we have started tourist projects mainly in Hurghada, Sharm El-Shiekh and Cairo,” Jamal Al-Hamed, chief development officer of Swiss International Hotels and Resorts, told Arab News.

Ahmed Awad, who is chairman of the board at Tharawat, said the company aimed to build eight hotels for the Swiss chain in two years with investments worth $450 million in Cairo, Hurghada, Sharm El-Sheikh and Marsa Alam on the northern coast, as well as Luxor and Aswan.

Awad said the company intended to invest in the management and operation of hotels in the administrative capital and the new city of El-Alamein.

Swiss International Group CEO, Nagy Al-Shiha, confirmed that the group aimed to reach 30 hotels by the end of 2020.

Al-Shiha said the group planned to build and manage 20 hotels in Egypt in addition to tourist resorts during the next five years.

“We started our long-term strategy to expand in Arab countries which includes Jordan and Egypt,” Al-Hamed said. “We are already present in all Gulf countries and, in the next period, our focus will be on north African countries. We aim for Tunisia, Algeria and Morocco but we will start first with Egypt.”

Economic and commercial relations between Egypt and Saudi Arabia have experienced continuous growth since the 1980s. Saudi investments in Egypt rank first among Arab countries and second globally.

Total Saudi investments in Egypt have reached $54 billion, including $44 billion in investments for Saudi companies or their Saudi partners in Egypt and $10 billion in investments from the Saudi government through the public investment fund.

According to the vice-chairman of the Saudi-Egyptian Business Council, Abdullah bin Mahfouz, the top sectors for Saudi investments are services, followed by industry, construction, real estate development, agriculture, communications, IT, tourism and banking.


$8bn blow to Erdogan as investors flee Turkey

Updated 09 July 2020

$8bn blow to Erdogan as investors flee Turkey

  • Overseas holdings in Istanbul stock exchange are at lowest in 16 years

ANKARA: Foreign capital is flooding out of Turkey in a massive vote of no confidence in President Recep Tayyip Erdogan’s economic competence.
Overseas investors have withdrawn nearly $8 billion from Turkish stocks since January, according to Central Bank statistics, reducing foreign investment in the Istanbul stock exchange from $32.3 billion to $24.4 billion.
As recently as 2013, the figure was $82 billion, and foreign investors now own less than 50 percent of stocks for the first time in 16 years.
“Foreign investment has left Turkey for several reasons, both internal and external,” Win Thin, global head of currency strategy at Brown Brothers Harriman, told Arab News.
“Externally, investors fled riskier assets like emerging markets during the height of the coronavirus pandemic. Some of those flows are returning, but investors are being much more discerning and Turkey does not seem so attractive.”
In terms of internal factors, Thin said that Turkish policymakers had made it hard for foreign investors to transact in Turkey. “This includes real money clients, not just speculative.
“By implementing ad hoc measures to try and limit speculative activity, Turkey has made it hard for real money as well. Besides these problems, Turkey’s fundamentals remain poor compared to much of the emerging markets.”
Erdogan allies claim international players are manipulating the Istanbul stock exchange through automated trading, and have demanded action to make it difficult for them to trade in Turkish assets.
Goldman Sachs, JPMorgan, Merrill Lynch, Barclays and Credit Suisse were banned this month from short-selling stocks for up to three months, and this year local lenders were briefly banned by the banking regulator from trading in Turkish lira with Citigroup, BNP Paribas and UBS
JPMorgan was investigated by Turkish authorities last year after the bank published a report that advised its clients to short sell the Turkish lira.
MSCI, the provider of research-based indexes and analytics, warned last month that it may relegate Turkey from emerging market status to frontier-market status because of bans on short selling and stock lending.
With the market becoming less transparent, overseas fund managers, especially with short-term portfolios, are unenthusiastic about the Turkish market and are becoming more concerned about any forthcoming introduction of other liquidity restrictions.
The exodus of foreign capital is likely to undermine Turkey’s drive for economic growth, especially during the coronavirus pandemic when employment and investment levels have gone down, with the Turkish lira facing serious volatility.