The accommodations, and prices, are fit for modern-day pharaohs. Situated between the Red Sea and the mountains of the Eastern Sahara, with a beachfront of 4,000 feet along the Red Sea, a 620-acre desert development called Serrenia near Sahl Hasheesh is upping the ante for luxurious living in Egypt.

The hotel and residential resort will include five "palaces," a hotel, private villas and apartments, with amenities such as a marina, golf course, heliport, shopping facilities and restaurants. A brochure touting the hotel's 24-hour butler service says that "should your daughter's favorite pony need to be part of the family vacation, arrangements can be smoothly made for horse and groom to be flown in."

The palaces -- at around 40,000 square feet each, large enough to host receptions for as many as 600 guests -- will start at $25 million, including tropical gardens and swimming pool. Located on a neighboring man-made island will be eight villas costing $10 million and up, accessible via a private bridge. Additional villas start at $1 million, while apartments will range from $400,000 to $3 million.

Daily rates for the 118,000-square-foot hotel, likely to have about 200 rooms, haven't been set, though rooms are likely to cost upward of "several hundred dollars a night," says London-based Homi Mullan, vice chairman of finance and strategy at Luxembourg-based Vantage Real Estate Development Ltd., which is developing the project at a cost of $3 billion.

Serrenia was dreamed up by Khaled Shaheen, chief executive of Jordan-based conglomerate Shaheen Business and Investment Group SA, of which Vantage Real Estate is a subsidiary. Construction on the project, designed by Britain-based architects Foster & Partners Ltd., started in January and is due to be completed in 2010.

However, it faces competition from other large projects, particularly in the Middle East. Dubai has experienced the biggest development boom in the region as part of its efforts to diversify into tourism, technology and financial services to compensate for depleting oil wealth.

One rival -- albeit less expensive -- is likely to be the Palm, Jumeirah in Dubai, which is being developed by local developer Nakheel Properties. The project features townhouses, apartments, retail facilities and several hotels, including one by Trump International.

"Top-end-of-the-range developments in the Middle East are very sexy," says David Camp, a director at consulting firm Economics Research Associates in London. But there are limits to the market, he cautions. "There is an appetite for exclusive resorts in the region and such resorts tend to establish a particular destination, as has happened with Dubai. But how deep is the market? It's not infinite, so these [projects] are competing with each other."

The more expensive a resort, the more limited its audience, says Blair Hagkull, managing director of real-estate advisory firm Jones Lang LaSalle in Dubai. Keen to hedge their bets -- and appeal to a wider target audience -- many developers in the Middle East are developing resorts with a range of facilities to suit different pocketbooks, says Mr. Hagkull.

Overbuilding also is a risk, Mr. Camp adds, although that is less of an issue in Egypt where development isn't on the same scale as in Dubai.

According to Cairo-based investment bank EFG Hermes, about 69,000 homes are to be completed in Dubai this year, outstripping the bank's estimated demand for between 40,000 and 50,000 homes.