A 50:50 venture by the Saudi and Egyptian governments, the Saudi-Egyptian Construction Company (SECON) stayed committed to its property development investments through recent tough times and is now a prime example of the country’s real estate potential. CEO Darwish Ahmed Hassanin explains what Egypt has to offer investors and why they should get involved early.
The Saudi-Egyptian Construction Company (SECON) is acknowledged as one of the few companies that never changed its investment plans during the revolution and the difficult moments. What is the current situation of SECON? We know that you have a new project going on and it is a very exciting year for the company, so can you describe the strategies for this year?
The success of Egyptian investors is the best invitation for foreign investors to come here, as no foreign investors will invest in Egypt if Egyptian investors are unable to invest. Good advertising, such as the economic conference, also contributes to attracting foreign investment, lots of which goes to the new Suez Canal.
Regarding SECON, it is a Saudi-Egyptian construction company, that is, a company that is equally owned by the Saudi and the Egyptian governments. It was established in 1975, 40 years ago, and the capital was divided equally between the two governments. It was established for real estate and tourism investment in Egypt only, and since it was established till today, it has operated in the Egyptian market and produced different types of apartments in different locations in Egypt. Due to the success of this company in the Egyptian market, the two governments decided to increase the paid capital by $243 million, which was equally divided as well by the two governments. The Saudi government contribution was done in cash, while the second half by the Egyptian government consisted in three pieces of land whose total area is 100 acres and is located in three different cities, being 68 acres in New Cairo, 17 acres in New Damietta and 13 acres in New Assiut.
Then, we have a project in New Cairo, another in South Egypt, and another one in North Egypt, towards the Mediterranean Sea. We are taking care of making a good investment and making a profit, but at the same time we have to meet certain social requirements for our country and for our people, which is why we make different investments in different areas. We have not decided to make any project without having a very careful study stating that a type of project is needed in a particular area. For example, we have decided to build a four-star hotel in our area in New Damietta, towards the Mediterranean Sea, which will be operated by an international brand. We chose this after a very detailed study stated that this area is in bad need of a hotel, since it is close to the Damietta port. Within two years, SECON will own two hotels in Egypt, one five-star in Cairo and a four-star in New Damietta. Both hotels are badly needed in these two areas. When we decided to make the hotel in Maadi, in Cairo, it was only after a careful study stating that Cairo is in need of about 2,000 hotel rooms and that the best place for a new hotel is in the Maadi area, towards the Nile River, so we decided to go ahead.
Furthermore, we never revised or stopped our investments at all during the revolution. The projects we have planned or under construction at the moment are the biggest since our company was established, as we believed that Egypt will pass that critical situation. The country has huge resources; we are one of the best countries in the world if you take into consideration our location, climate, history and population, which is 40% composed by young people.
The Egyptian construction company is part of the Egyptian economic situation and we consider that this place is a very good place for investment, so we do not plan to stop. On the contrary, we are moving on with our investments in a positive way alongside very careful studies. If we think an area is appropriate for a project, we do not proceed immediately unless we do a bold exercise, research and take a very careful stance before we start carrying out a proper investment in a proper area at a specific time.
It is thanks to the Egyptian businessmen who really believed that Egypt was going to move forward that the country is now experiencing this great momentum.
We have very good resources, which makes us feel optimistic about the future. Our president is a very good one; he likes this country very much, and he’s working and studying a lot to improve the situation for all Egyptians. I believe this 100%, and the better proof of this has been shown in his behavior and actions until now. But this is not all. What are also helping him are the country and the people. By this, we can see that he has a strong advantage, which is that the people believe in him, like him, and find him a good example of leadership in the country. EGP 64 billion were collected by Egyptians for investment [in the Suez Canal expansion project] in just one week and I think two major factors allowed this to happen. The first one is that people believe in their country and would like to improve the situation. And secondly, they also believe in the president’s will and capability to drive these investments. He has strong support from Egyptians and I believe he is making very good use of this support. I can see in front of me a good future for my country.
You have stated that this year’s Egypt Economic Development Conference (EEDC) should be the first of a series of conferences to be held regularly. What are your comments about the results, MOUs and agreements for future investments that were signed during the conference?
The preparation for the economic conference was really good, as well as the presentation of several projects and activities during it. I can say the event was up according to the requirements and results of it. These results turned to be excellent, in which it concluded with several agreements and MOUs signed regarding the different activities in Egypt such as housing, energy and other important areas.
The development is based on the participation between the government and the private sector, in which enrolled both parts of it (local and foreign). The first issue presented at this conference was that the country has showed something like an investment net, explaining the major investment requirements needed for several activities. Before this, the usual way was for investors to come to Egypt with a certain idea and try to make an investment in specifically and chosen area. However, during this conference, the government mentioned the major project it needs at the moment and showed it to investors. Nowadays, investors who come to Egypt have the opportunity to find a roadmap of investments that shows the country’s interest in certain investment areas needed. This was the first time it was presented like this, and that is why I am saying that the preparation and presentation of the conference were excellent and brought very good results in terms of the documents that were signed.
Now, what are needed are huge efforts to bring these signed memorandums and agreements to reality, so we can start moving and working. I know it is a huge effort that has to be done in a short time and it is very difficult. There are important agreements to be signed and the main issue to take into consideration is that the rights of the government and of the investors should be protected. We are all saying that no successful investments will happen if all parts are not respected and the investments brought to reality.
Then, as I am saying, in order to activate and get these agreements and MOUs into reality, huge efforts are needed. I do not consider these efforts to be related to those made for the preparation and presentation of the conference; these efforts are much harder, and that is why it is taking more time than usual, as we need these investments and all of their parts to succeed. In recent weeks, three MOUs were activated and agreements were signed, including a partnership between the government and a joint venture which involved local and foreign investors. This is a good example for future actions and participation. This agreement between the government and local and foreign investors can be used as a raw model on how to proceed for future and incoming investments in the country.
During the last two weeks, three agreements were signed. One of them was an MOU, agreed during the conference and that hadn’t started to get moving until now, in which involved some tourism and housing projects. We are expecting other memorandums that were signed in the conference to be activated soon.
Now, our president has mentioned that he would like to make this economic conference happen every year. However, we are struggling very hard to have things which were signed during the first conference to be activated so we can ensure new projects for the next conference. Having agreements activated this year is a good way to have new related opportunities for next year’s conference.
Everybody is talking about having a first successful run of investments in order to create the necessary confidence. President Al-Sisi gave an interview just before the conference in order to promote it and mentioned that the idea of the conference came from King Abdullah of Saudi Arabia.
After the June Revolution, King Abdullah announced the economic conference that would establish a vision for the coming future. It was very kind of King Abdullah to call for the conference and announce that the countries who would like to support Egypt at this stage were invited to this gathering. From this onwards, the idea was developed further and a plan was made to extend the invitation and include many countries.
Regarding the things that have been happening in Egypt in terms of foreign investment, a lot has been done with the new Suez Canal in a very short time. This is really positive as it invites new investment to Egypt, just like the economic conference did. It is similar in force, because if a foreign investor is planning to invest in Egypt, he will see that huge work has been done in this country in a very short time, which means that a huge investment can be done here. Therefore, it is a very good invitation for foreign investors to come.
I can say the amount of dry and wet excavation that was done in the new Suez Canal in this very short period has never been done in any part of the world. The money used to carry out these investments was collected from the Egyptians; it is about 64 billion Egyptian pounds gathered in almost one week. Then, you can imagine how proud we feel about our people in Egypt and the work that has been done in the new Suez Canal, which was opened at the beginning of August, as planned. It was started on time and it finished on time. There are many factors involved in this process allowing all of this to happen in the country: a good presidency, good people, and a lot of desire. It is something fantastic. I am not saying this because I am Egyptian, I am saying this as a fact.
Taking into account that you are addressing almost 2 million readers from the Gulf, what would you say to them to make them consider investing in real estate properties and make long-term investments in the country?
First of all, I can say that people in the Gulf area believe in this and they have done it for a long time. They think investing in an apartment or any unit in Egypt is good because its value has been increasing yearly. The value of real estate assets has been increasing for a long time, which is something that does not happen in all places of the world. Even during the critical situation, after the revolution, the value kept on increasing. Hence, they do believe and know that real estate here is a good investment.
The second factor is that they like Egypt and they like Egyptians, our weather, and our social life. That is why they like taking their vacations here. In addition, they see it from a political perspective; if Egypt is doing well, it is beneficial for every Arab country, so they like seeing this country stable and powerful.