ERC’s business model focuses on creating long-term shareholder value from the growth of three revenue streams: land sales, development of strategic real estate assets, and the exclusive sale of utilities (water, electricity, communications) and community management services.
The company pursues an integrated, full-cycle development strategy. It acquires broad acre land holdings suitable for premium mega development at nominal value, creates a master plan with some of the world’s leading architectural and urban planning firms, builds state-of-the-art infrastructure networks, implements design guidelines and community management rules and regulations, and then on-sells individual pre-designated plots to sub-developers and investors whose main businesses are hotel ownership, operation and management, as well as luxury resort residential real estate development.
Unlike most developers, ERC focuses on the macro development of infrastructure and land plot sales. The timing of land sales — which tend to be large, strategic plots — to value-adding developers is based on a strategic assessment that balances current supply and future demand for real estate and hospitality products. ERC targets a healthy pace of land release so as to preserve the value of its residual land bank as well as the returns on the investments of sub-developers.
ERC builds and manages, directly or through subsidiaries, a number of strategic one-off assets within the community to ensure the presence of a base supply of property units and critical amenities and provide a quality-control framework for other sub-development projects. ERC is developing the only marina in Sahl Hasheesh, Sawari, and also develops the commercial downtown core for each master-planned phase of development.
Recurring Revenue: Utilities and Community Management Services
ERC is the sole utilities provider through extensive investment in state-of-the-art infrastructure including water desalination and purification plants, sewage treatment facilities, lift-pump stations, an electricity sub-station, and latest generation fiber-optic networks. One source of the company’s recurring revenue is the exclusive sale of utilities. Owned by ERC, utilities represent a steady stream of revenue that grows rapidly as the community develops.
Complementing the utilities business, Egyptian Resorts Company’s strategic model also includes community management services as a revenue stream based on a cost-recovery model plus a management fee. ERC provides the full array of community services to its residents including security, waste management, public area and beach maintenance, cleaning, community brand and reputation management, and quality and design control.
Although ERC’s present operational focus is on the development of Sahl Hasheesh International Resort Community, the company continues to target a position as the region’s leading master-developer. The institutional skill sets and best practices developed on the Red Sea coast are equally portable to other large-scale mixed-use, industry-based or agriculture-based communities locally and abroad.
ERC’s Business Development team continuously searches for and investigates expansion opportunities suitable to ERC’s development model.