The changing face of community
11 December 2023
Swiss-Egyptian property group Orascom Development Holding has been on a transformative journey over the past three years in response to global pressures on its core markets and areas of activity.
Operating in seven countries – Egypt, Morocco, Oman, the UAE, Montenegro, Switzerland and the UK – the group develops mixed-use communities that combine residential units with social infrastructure and amenities – and, more recently, commercial office space.
It also owns 33 hotels with a total of 7,000 keys that it either self-manages or allows a third party to manage, and holds a landbank of 100 million square metres across the seven countries, of which two-thirds is yet to be developed.
Orascom Development’s model revolves around developing out-of-town locations that provide a sense of departure from urban life while remaining within reach of major cities.
Historically, much of this was keyed into second home ownership, but more recently, and particularly with the Covid-19 pandemic, shifting global attitudes to work and travel have driven the group to reorient itself to new realities.
Group CEO Omar El Hamamsy notes that at the height of the pandemic, the black swan event resulted in diverging effects on the group’s hotel and real estate businesses. While travel restrictions led to a downturn in its hotel business, the real estate business experienced an unexpected surge in demand.
Much of this surge was driven by people seeking an escape from urban environments, which boosted the appeal of the group’s lifestyle-oriented out-of-town developments. Consumer mindsets also shifted from viewing such properties as second homes to viewing them as prospective primary residences.
As El Hamamsy explains: “The purpose of those towns historically was for them to be second homes. Over time, that model has morphed into: ‘Well, hey, especially after the pandemic, should these places and towns be your primary home in the first place? Why wouldn’t you live in the Swiss Alps, an hour and a half away from Zurich, or an hour or two hours away from Milan, if you can do that?’”
This shift has created demand for commercial space within existing communities, such as at El Gouna (pictured below), the community established by the group on Egypt’s Red Sea coast near Hurghada in the ’90s.
This has led, notes El Hamamsy, into “the creation of co-working spaces – so in El Gouna, we have something called G Valley, which is our little Silicon Valley, to which we’ve attracted a whole bunch of startups. Now a bunch of digital nomads startups come in and they use those co-working spaces.”
Divesting peripherals
The group is also pivoting towards leaner operations and away from the development model it followed in the past, in which it ran everything from utilities and infrastructure to services and amenities such as schools, hospitals, marinas and leisure facilities, including even one ski resort.
El Hamamsy notes the group’s need to stay focused on its core competencies and profit centres and to disentangle itself from operational aspects.
“As part of our growth strategy, we recognise the need to transition from owning and operating everything,” he says. “This move is geared towards achieving profitable growth, enhancing customer experiences, and unlocking the stored value in our assets.
“The model over the past 30 years was incredibly capital intensive – putting a lot of money into cement and steel, into pipes underground, into schools and hospitals – so at some point, we needed to become more asset-light.
“The next step, and the one we’re doing now, is actually returning dividends to our shareholders through some de-assetisation – unlocking some of that stored value and returning it.”
In the past three years, the group’s strategic realignment has led it to post 2022 revenues that were 77 per cent higher than in 2020 and 52 per cent higher than the 2019 baseline.
Gross profit then nearly tripled from 2020 to 2022, while a 10-year net profit loss has become a two-year winning streak in 2021 and 2022, according to El Hamamsy.
There are positive projections for profitability in 2023, too.
Optimising integration
Moving forward, while all of the group’s communities are still being developed with a similar furnishing of facilities as before, a key difference is that operational partners are being brought on board from the beginning – convinced by the group’s now multinational, multi-decade track record of development.
One community under active development along these new lines is O West, a masterplan in Egypt’s 6th October City, about 40 minutes west of Cairo’s downtown.
Here, as El Hamamsy notes: “Now we’re at the maturity level where we can get out of owning and operating everything. We don’t need to generate our own electricity or do our own landscaping, necessarily. We don’t need to operate schools. In O West, we have brought in three operators for the schools, and that’s working great for us.
“And in the extension of our hospitals and wellbeing experiences, we’re bringing in third parties who specialise in certain types of wellbeing to actually build their own infrastructure and operate their own infrastructure.
“Our role, ultimately, is to curate, just like a museum curator – to say: this is the right experience for that community at this point in time.”
The group’s communities are also being designed to accommodate a broad demographic, including by incorporating affordable housing into their masterplans to ensure the entire working population can live there.
El Hamamsy emphasises the distinction between the group’s holistic approach and that of other residential developments, which – while integrating a range of different facilities and spaces – often lack functionality as fully-fledged communities.
Orascom Development’s level of community integration, on the other hand, even extends to its ownership of the El Gouna Football Club, which now sits in the Egyptian Premier League, based out of its El Gouna development.
It similarly owns an ice hockey team in connection with its community in Andermatt, Switzerland.
The group also undergirds sports and cultural events, such as the Ironman 70.3 Salalah, which centres on its Hawana Salalah community, and the El Gouna Film Festival.
And the communities keep coming. In 2022, Orascom Development welcomed residents into its first community in the UK – a lakeside village in Cornwall, while the first phase of O West in Cairo was delivered in 2023.
Despite the inflationary pressure in Egypt, the real estate market remains vibrant, according to El Hamamsy, who notes: “The opportunities in Egypt, given its low asset prices post-devaluation and favourable demographics, make it an appealing prospect for serious investors.”
Looking ahead, Orascom Development is also in the early stages of developing a major new community in Chbika in southwestern Morocco, and at Al-Sawda Island, off the southern coast of Oman – both just parts of the huge land bank that the group is yet to develop into its singular vision of urban planning.
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Adnoc Onshore has divided the scope of work on the Bab and North East Bab One Tie-In project into 18 packages, which are as follows:
Bab asset
Package 1:
Off-pad – Demolition and construction of existing oil producing wells as per high hydrogen sulphide (H2S) standard package.
Package 2:
Off-pad – Construction of new oil producing wells as per high H2S standard package.
Package 3:
On-pad – Demolition and construction of existing oil producing wells as per high H2S standard package.
Package 4:
On-pad – Construction of new oil producing wells as per high H2S standard package.
Package 5:
On-pad – Construction of facilities at mini-pad, pad or well bay for tie-in new oil producing wells as per high H2S standard package.
Package 6:
Off-pad – Construction of new oil producing wells (low H2S) as per standard package.
Package 7:
- Construction of water supply, disposal and injection wells as per standard package;
- Construction of off-pad water injection wells;
- Construction of on-pad water injection wells and water injection manifold.
Package 8:
Off-Pad – Digitalisation of existing wells.
Package 17:
- Well bay: On-pad wells, flowline, common facilities (PSS, CI skid, WHCP), overhead line;
- Mini-pad: On-pad wells, transfer line, blow down header, common facilities (PSS, manifold-OIL, MPFM, CI SKID, WHCP, drain oil network, pig launcher, receiver, potable water system), overhead line;
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- On-pad: Gas lift oil producer;
- Electrical submersible pump (ESP) well: on-pad;
- ESP well: off-pad.
North East Bab asset
Package 9:
Cluster-based – Construction of new oil producing wells at Al-Nouf.
Package 10:
Cluster-based – Construction of new water alternating gas (WAG) injection wells at Al-Nouf.
Package 11:
Remote – Construction of oil producing wells.
Package 12:
Remote – Construction of WAG wells.
Package 13:
Cluster-based – Construction of oil producing wells at Rumaitha and Shanayel.
Package 14:
Cluster-based – Construction of WAG wells at Rumaitha and Shanayel.
Package 15:
Cluster-based – Construction and/or modifications of oil production/test manifold, gas injection/gas test manifold, let down gas manifold well head control panel, gas supply connection for injection, gas supply connection for gas lift. Chemical injection skid, water injection manifold, maintenance flare package. Installation of new pig traps, installation of hot tap and extension of cluster plot.
Package 18:
- Al-Nouf cluster: Common facilities (ETR, ITR, vent stack, overhead line, oil manifold, test manifold, gas lift manifold, drain oil tank, common pipe rack, etc.), gas lift oil producer wells, WAG injection wells;
- Rumaitha cluster: Common facilities (ETR, ITR, vent stack, overhead line, oil manifold, test manifold, gas lift manifold, drain oil tank, common pipe rack, etc.), gas lift oil producer wells, WAG injection wells.
Bu Hasa asset
Package 16:
Off-pad – Digitalisation of existing wells.
Adnoc Onshore is Adnoc Group’s largest oil-producing subsidiary, accounting for 2 million b/d and about 7 billion cubic feet a day of associated gas production from four main onshore hydrocarbons field developments in Abu Dhabi – namely Bab, Bu Hasa, North East Bab and South East.
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Dubai-based developer Majid Al-Futtaim has signed an agreement with Dubai South to develop a AED62bn ($17bn) mixed-use community in the Dubai South area of the city.
The 22-million-square-foot development will include residential and retail components, anchored by a shopping mall.
Further project details and a construction timeline have yet to be disclosed.
In October last year, Majid Al-Futtaim announced new investments in Saudi Arabia and the UAE.
It signed an agreement with Saudi gigaproject developer Diriyah Company to introduce a Vox Cinemas multiplex and seven retail brands to Diriyah Square, part of the Diriyah project in Riyadh.
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The developer will bring international brands to Diriyah, including Shiseido, Lululemon, Crate & Barrel, Abercrombie & Fitch, AllSaints, CB2 and Hollister.
In Dubai, Majid Al-Futtaim also announced plans to launch Ghaf Woods Mall within its Ghaf Woods residential community in Dubailand.
According to an official statement, once completed, Ghaf Woods Mall will be the 30th mall in the developer’s portfolio and its 19th in the UAE.
In April last year, Majid Al-Futtaim revealed plans to develop a mixed-use project in Riyadh at an estimated cost of about SR17.5bn ($4.6bn).
According to media reports, the development will cover an area of 850,000 sq m and will include residential, commercial, office and entertainment components.
In the same month, the firm said that it will invest AED5bn ($1.4bn) to upgrade Dubai’s Mall of the Emirates with new retail, dining, wellness and entertainment facilities.
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