Harnessing the Red Sea: A Blueprint for Tourism and Investment Growth

Updated 9/28/2025 9:00:00 AM

The Red Sea coastline, with its pristine beaches, year-round sunshine, and strategic location, emerges as one of Egypt’s most promising frontiers for economic development. As the government seeks to diversify its economy and boost tourism, attracting private sector investment to purchase and develop land along this stretch of coast has become significant. From luxury resorts to integrated tourism hubs, the potential for job creation, foreign revenue inflows, and regional revitalization is immense.

Involving Private Sector Developers

Egypt's tourism sector contributed EGP 1.4 trillion to the country's gross domestic product (GDP) in 2024, accounting for 8.5% of the total national economy, according to the World Travel & Tourism Council (WTTC).

In 2025, the sector is projected to contribute 8.6% to GDP. Meanwhile, tourism revenues grew by 9% year-over-year (YoY), reaching $15.3 billion in 2024, compared to $14.1 billion in 2023, as reported by the Central Bank of Egypt (CBE).

In 2024, the Egyptian government revealed plans to offer four to five large coastal areas along the Red Sea for development. Prime Minister Mostafa Madbouly stated these sites will feature integrated development projects aimed at revitalizing promising regions. The initiative is modeled after the successful Ras El-Hekma project.

“The Red Sea region holds strategic significance due to its tourism potential, global visibility, and natural resources,” Economist Kholoud Wael tells Arab Finance. “Involving private developers can accelerate growth by introducing capital, efficiency, and innovative business models that may not be possible with public funding alone.”

Marwa Omar, Assistant Professor of Economics at Helwan University, points out that attracting private sector investments to Red Sea development projects is important: “The Red Sea's unique coastal geography and marine biodiversity present substantial opportunities for both coastal resorts and urban development.”

Omar explains that coastal and urban development projects like Marassi Red Sea are key “to enhancing the resilience and sustainability of a nation's economy. In Egypt’s case, the focus on diversifying its economic base, particularly through tourism, underscores a deliberate effort to reduce dependency on traditional revenue sources.”

She adds that “major developments stimulate foreign and Arab direct investments, indicating a stable investment climate.” Omar notes the role such projects play in job creation, highlighting that “Marassi Red Sea, for example, is projected to create up to 170,000 jobs during construction and about 25,000 permanent jobs afterward, boosting local disposable income and stimulating demand.”

Wael agrees, stating: “When managed sustainably, coastal projects create long-term jobs, not only in construction and hospitality but also in supply chains, transportation, and support services. This diversification helps stabilize the labor market by reducing reliance on seasonal or informal employment.”

She further highlighted that developing coastal resorts and projects across the Red Sea “directly attracts foreign tourists, investors, and operators, generating inflows through tourism spending, service fees, and cross-border partnerships. Beyond tourism, these ventures bring foreign currency through real estate investments, marina and yachting services, and event hosting. With strong marketing and upgraded infrastructure, the Red Sea could become a consistent source of hard currency for Egypt.”

Such projects strengthen the overall appeal of Egypt’s tourism. As Omar notes, “The sector is poised to generate substantial foreign currency, stabilizing the national currency.” In 2024, international visitor spending reached EGP 726.9 billion, according to the WTTC.

Navigating Investment Hurdles in Red Sea Development

Attracting private sector investments into Red Sea coastal projects could face some challenges. According to Wael, these include “infrastructure gaps, as developers may struggle with logistical challenges, including utilities, transportation, and accessibility. There is also the risk of overdevelopment harming fragile ecosystems, while bureaucracy, land allocation, and unclear policies can deter investors. Additionally, currency fluctuations and global downturns may affect demand.”

In this regard, Omar explains, "Development initiatives in the Red Sea pose significant risks to fragile ecosystems, including coral reefs and marine biodiversity. Unsustainable practices threaten biodiversity, making strict regulations essential."

Cumbersome regulations and slow bureaucracy can delay project approvals, raising costs and discouraging foreign direct investment (FDI). These obstacles, combined with a lack of transparency, create a challenging business environment that increases investor apprehension.

Development projects often face resistance from local communities concerned about displacement and the loss of their cultural heritage. As Omar says, insufficient engagement with these stakeholders can hinder progress, making it crucial to involve local populations more directly in the decision-making process.

To mitigate these challenges, Wael suggests “boosting public–private partnerships to co-invest in core infrastructure, implementing strict environmental regulations and eco-tourism incentives, streamlining procedures, enhancing transparency, providing legal guarantees, and diversifying offerings, such as wellness tourism, cultural tourism, and business hubs, to hedge against shocks.”

Egypt's strategic move to bring the private sector into the development of its Red Sea coastline holds immense promise for economic diversification, job creation, and foreign investment.

By leveraging its natural assets and private sector expertise, the country can significantly bolster its tourism sector, which is a key driver of GDP growth. While environmental risks, bureaucratic hurdles, and community concerns must be addressed, the path forward involves a collaborative approach.

By Sarah Samir