Gulf developers bet on the next Mediterranean destination
Sovereign wealth funds from Abu Dhabi and Qatar are among those pouring billions into Egypt’s north coast
A few decades ago, a traveller heading west from Alexandria on Egypt’s Mediterranean coast would have driven through desert fringed by a turquoise sea, occasional Bedouin stone houses and memorials to British, Italian and German soldiers killed in the second world war — before reaching the first town, Marsa Matruh, some 260km away.
The coast has since then become a popular summer holiday spot for well-off Egyptians, home to gated communities whose exorbitant prices have earned its expensive western stretch the nickname the “evil coast”.
But the region is now on the brink of what developers, mostly from the Gulf, hope will be a far greater transformation — one that will turn it from a domestic destination with a brief seasonal window into an international hub attracting foreign property buyers and tourists.
Sovereign wealth funds from Abu Dhabi and Qatar, along with Dubai-based developer Emaar, are among those pouring billions of dollars into mega-projects offering hotels, yacht marinas, malls, schools and healthcare. The Egyptian government has also invested heavily in roads, airports and New Alamein, intended for year-round living.
“The coming of the Gulf developers can be a game-changer,” said Omar El-Shenety, an Egyptian investment banker and managing partner at Zilla Capital. The developers “are very familiar names to Gulf citizens and they trust them. So, I expect them to become sizeable buyers.”
The Abu Dhabi and Qatari investments were widely seen by economists as bailouts aimed at shoring up Egypt’s heavily indebted finances and helping Cairo secure IMF loans.
Abu Dhabi in 2024 paid $35bn for development rights to 40,600 acres in Ras el-Hekma, roughly 1.7 times the size of Barcelona, in the largest foreign investment in Egypt’s history. Master developer Modon Holding said the site would include tourist facilities, a marina, airport, investment and free zones, and 310,000 homes for an eventual population of 2mn.
Qatari Diar, owned by Qatar’s sovereign wealth fund, followed in 2025 with a $30bn project to transform Alam al-Roum into a year-round luxury destination.
Egypt’s largest developer, Talaat Moustafa Group, partnered with the state on the $21bn SouthMED development, which was launched in 2024 with an English-language ad campaign fronted by actor Sylvester Stallone. TMG has promoted the site as “a new global destination rising on the Mediterranean”.
Construction and off-plan sales for the initial phases of all three mega-projects are already under way, but the risk is that such large urban projects do not go to plan. “There will always be some vulnerability to the economic and geopolitical risks of the region,” said Shenety.
“I would describe the north coast as a destination in transition rather than a fully mature international resort market,” said Moataz Sedky, general manager of Travco Holidays, a tourism company that owns nine hotels on the north coast.
While Egyptian destinations like Sharm el-Sheikh on the Red Sea and Luxor have long been popular with foreign visitors, the Mediterranean coast has catered almost exclusively to Egyptians.
But the region, Sedky said, was “beginning to see the emergence of two additional markets: visitors from the Gulf and international leisure tourists, particularly Europeans”.
The hope now, analysts say, is that the new mega-developments will change an economic model currently built around a brief summer season.
In June, upmarket restaurants and retailers open to serve holidaymakers, selling everything from outdoor furniture to golf carts for zipping around the compounds. But almost everything is mothballed by mid-September, when the visitors depart.
A glimpse of the region’s potential can be seen in Marassi, an upscale beach resort by Emaar. The meticulously landscaped palm-lined compound boasts a 6.5km seafront, 8,000 homes and 12 luxury hotels, where a night during peak summer can cost more than $1,000.
Its yacht marina is overlooked by a promenade lined with dozens of restaurants and high-end boutiques. On an August night, it was thronged with well-dressed crowds, including many Gulf visitors, waiting for tables at alfresco dining spots. The vibe was more Dubai than Egypt, without the stifling heat.
Ali, a Kuwaiti businessman dining with his children who did not want to give his full name, said he had not seen “cleaner and more beautiful beaches. We come for the swimming and we are in the sea from morning till evening.”
Hotel occupancy in Marassi in late August was 65 per cent non-Egyptian, almost exclusively from Gulf countries, said Mohamed Alabbar, the founder and managing director of Emaar. “This is what we were wishing for six years ago, because typically they are big spenders and stay for a long time.”
However, only 10 to 15 per cent of housing units were sold to Gulf citizens. “We’re just starting because it [the north coast] is not discovered yet. Even for us in the Gulf, we only learnt in the past 10 years about its incredible beauty and weather.”
Alabbar has been pushing to extend Marassi’s season beyond September. Three of the hotels operate year-round, and he has insisted shops in the marina remain open in October.
“I told them last year that if they stayed open, I wouldn’t charge them rent,” he said. “But I made it clear: if you don’t open, I won’t renew your lease. Everyone opened except for one retailer, and we are terminating his lease.”
The developments could benefit existing compounds. Ramla, a new resort on the doorstep of Modon’s Ras el-Hekma project, expects to gain from proximity to what it hopes will become a city with services, job opportunities and year-long occupancy, said Ahmed Badrawi, executive vice-chair of developer Marakez.
“As a relatively small resort community, we would get the benefits of a small compound plus all the advantages of being next door to a fully integrated city,” he said.
North coast property sales reached over $10.4bn in 2025, making it the country’s second-biggest property investment destination after east Cairo, said Ahmed Zaki, managing director of advisory firm The Board Consulting.
To maintain the flow of visitors beyond beach season, Sedky said more hotels, year-round scheduled flights, restaurants, convention centres and sports facilities were needed.
“Hotel capacity remains a main constraint if international demand continues growing at the present rate,” he said, adding that some of winter would be suitable for sports, conferences and cultural tourism. “The mistake would be to assume a year-round destination must sell the same product in January as it does in July.”
Tourists visiting the coast were not far from Egypt’s more traditional attractions, Alabbar pointed out. “You can spend three or four days here, drive down to see the Pyramids and then come back.”