A general view shows the West Bay skyline in Doha, Qatar, February 8, 2024. REUTERS/Thaier Al-Sudani

Egypt has for years been pushing to secure foreign investments, especially from wealthy Gulf states, as it seeks to tackle heavy foreign debts and a gaping budget deficit.

The development aims to turn Alam Al-Roum, an undeveloped stretch of coastline 480 kilometres (300 miles) northeast of Cairo, into a year-round destination that will attract international visitors and will include luxury neighbourhoods, golf courses, marinas, schools, universities and government facilities.

The agreement with Egypt's New Urban Communities Authority includes a payment of $3.5 billion for the land and an in-kind investment of $26.2 billion to build the project that will cover an area of 1,985 hectares (4,900 acres) along a 7.2 km stretch of coastline, the source said.

The large-scale urban development project in Egypt’s eastern Matrouh Governorate is the first significant investment the Qatar has made in Egypt’s struggling economy since pledging to invest $7.5 billion earlier this year.

The development is expected to generate annual revenue of at least $1.8 billion, 15 percent of which will be allocated to the New Urban Communities Authority after the company recovers its total investment cost, the source said.

Egypt's sovereign bonds, which had been trading lower earlier in the day, flipped to gains of up to 0.4 cents, opens new tab, with the 2050 maturity bid at 94 cents on the dollar.