Gulf News

Desert ski slope lays tracks for Egypt’s consumer-led revival

Majid Al Futtaim to invest $600m in megamall in Cairo and make another shopping centre five times bigger

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Weaving through the packed parking lot toward the Mall of Egypt, a new $700 million (Dh2.57 billion) retail palace complete with a Dubai-style indoor ski slope, it’s easy to think that the country’s economy is well and truly on the mend after years of crisis.

In fact, Egypt’s biggest shopping centre is opening its doors after household spending power was hit by sharp drop in the pound’s value following a decision to lift currency controls to ease a crippling dollar shortage. Instead of sounding the retreat, companies like the mall’s developer, Majid Al Futtaim, are doubling down on their commitment­s to the Arab world’s most populous nation as they bet on its most resilient asset: consumers.

“I’m not worried about falling disposable income because for a number of years Egypt has had an official economy that was sustained by a gray one,” the Dubai-based developer’s chief executive, Alain Bejjani, said in an interview in Cairo. “The current situation is beginning to look positive compared to where things were.”

Majid Al Futtaim, whose Mall of the Emirates in Dubai also features indoor skiing, will invest $600 million to build another mega-mall in Cairo and make another shopping centre five times bigger, the CEO said. And he’s not alone: retailers and producers including Nestle SA, Mars and Turkey’s BIM are expanding their business. Saudi developer Fawaz Alhokair Group, whose Mall of Arabia stands just a few kilometres away from the Mall of Egypt, plans to spend 8 billion Egyptian pounds (Dh1.62 billion; $441 million) to build three shopping centres over the next three years.

High growth engine

“As far as I can see, Egypt will continue to be considered a high growth engine for multinatio­nals and local companies,” said Yasser Abdul Malak, CEO of Nestle’s Northeast Africa unit. Nestle plans to invest 1 billion Egyptian pounds in expansion as the country’s large but underserve­d population creates the opportunit­y for companies to achieve “exponentia­l growth,” he said.

There’s still plenty of risk. More than four months after Egypt floated the currency to clinch a $12 billion IMF loan, inflation is at its highest level in three decades, fuelling concerns that further economic reforms could trigger social unrest in a country where two presidents have been toppled since 2011. For companies, the pound’s slump will erode revenue for foreign companies that book their earnings in other currencies.

“The biggest risk for the country over the past few years was the potential flotation of the currency and that is no longer a risk,” Mohammad Zein, Mena analyst at Renaissanc­e Capital, said in a phone interview from Dubai. “This should bring foreign investment­s back.”

 ?? Bloomberg ?? Egypt’s biggest shopping centre, the Mall of Egypt, a new $700 million (Dh2.57 billion) retail palace is complete with a Dubai-style indoor ski slope,
Bloomberg Egypt’s biggest shopping centre, the Mall of Egypt, a new $700 million (Dh2.57 billion) retail palace is complete with a Dubai-style indoor ski slope,

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