As demonstrations calling for the removal of President Hosni Mubarak continue, and as Egyptian banks and the stock exchange remain closed, many UAE investors are expressing concern about their investments in Egypt, which exceed $10 billion.
There are 492 UAE companies with investments in Egypt, operating in various economic sectors, except for projects in the sectors of oil and gas, and real estate.
Emaar Properties, the largest foreign direct investor in Egyptian real estate, has investments valued at more than $5.8 billion. The company, which operates under the name "Emaar Misr for Development" is developing five projects in Egypt including Uptown Cairo, the Marassi, the Mivida, and Cairo Gate, in addition to the Sheikh Khalifa bin Zayed housing development project.
In the last five years, 277 UAE-based companies were registered in Egypt of which 20% were in the industrial sector, 15% in construction, 10% in finance, 10% in agriculture, and 8% in tourism. Fifty percent of the capital invested by UAE companies in Egypt is in the telecommunications sector.
Exchange shops in the UAE said Wednesday (February 2nd) that the closure of Egyptian banks prevented Egyptians who work in the Gulf from sending remittances back home. Remittances from citizens working abroad are an important source of revenue for the Egyptian economy. According to the World Bank, remittances to Egypt totaled nearly $7.6 billion in 2010.
Hazem Ali, an economics editor at Al Arabiya in Dubai, told Al-Shorfa that political stability in Egypt attracted many UAE investors over the past several years for both long-term and short-term investment opportunities.
"The impact of the protests on the first type [long term] of investments, which includes real estate, tourism, industry and agriculture, was slight and negligible, while the second type of investments suffered heavy losses as a result of the stock market decline," Ali said.
"I do not doubt that continued unrest will delay the flow of UAE investments to Egypt temporarily, or until stability returns," Ali said. "The Egyptian market is promising in terms of its opportunities and its size. I believe that when stability returns to Egypt it will lead to a further influx of investments, especially if economic reforms are implemented and transparency is promoted."
He said the total losses for Emiratis in Egypt are still limited.
"They are fully aware that what they are witnessing in Egypt is only a summer cloud. As soon as it disappears, Egypt will be an ideal investment destination again," he added.
On January 30th, UAE stock markets declined sharply because of the situation in Egypt, where market value suffered a $3.7 billion loss in total value, falling to $99.3 billion dollars, its biggest loss in since several months.
Abraham Al-Akawi, a financial analyst, predicted that the current crisis in Egypt will have further consequences on the stock market in the Gulf region. This week's decline prompted several Arab Gulf investors who were worried about the unrest to liquidate their stocks, which caused the region's indices to drop to their lowest levels.
Al-Akawi told Al-Shorfa, "Gulf losses will be concentrated in the private sector in Egypt which will cause a breakdown in productivity." He referred to private Gulf investments in Egypt as the largest in the country in comparison with other foreign investments.
Al-Akawi noted the major Gulf investors in Egypt, starting with Saudi Arabia which is the leader through large companies such as Al-Maraeen, Safolan, Kingdom Holding Company, Al-Zamil and Babteen.
Kuwait ranks second with the National Bank of Kuwait, Americana, Global, Alargan International Real Estate Company. The UAE is the third largest investor with Emmar, Itisalat, Union National Bank, and Dana Gas. Bahrain has investments in Al Baraka Banking Group and Ahli United Bank. Qatar follows with the Barwa Real Estate Company.