CAIRO: Majid Al Futtaim Group (MAF) will invite bids starting November 2010 for its Mall of Egypt project worth LE 4.4 billion.
The project, which will sprawl over 160,000 square meters, is currently in the design phase, which will be completed by October 2010 to be followed by the bidding process.
According to their website, the Dubai-based firm has 10 operating centers with a total retail area of over 800,000 square meters in the Middle East. They have also announced plans for new developments in Lebanon, Egypt, Syria, Oman, Kingdom of Saudi Arabia and UAE.
The Mall of Egypt project will reportedly include 350 stores, a 17-screen cinema complex, a Magic Planet, an outdoor plaza, dining outlets and a skiing facility.
According to MAF, Ski Egypt, an indoor skiing facility, will be modeled after the one in Mall of the Emirates, the firm’s flagship shopping center in Dubai.
Commenting on the development of Egypt’s retail sector, emulating the success of other Gulf countries, Hamed Hesham, retail and consumer analyst at investment bank Beltone Financial, said that malls in Egypt are undersupplied relative to the country’s sizeable population and consumer base. Compared to other Arab and Gulf countries, Egypt has a very limited number of malls as a ratio to population size.
Even malls targeted to higher end consumers are insufficient as upper middle and middle classes in Egypt can still be considered a significant consumer pool, he added.
A 2010 report by Retail International, an independent retail consultancy specializing in the Middle East and North Africa, labeled Cairo as the city “that outstrips all others in real terms of projected new organized retail floor space with over 1.9 million square meters of Gross leasable Area (GLA) due to be added to the existing stock by 2015.”
Its current estimate of GLA in Cairo in 2010 is around 622,000 square meters.
In many cases, the shopping malls being built here are not just for high-end consumers nor are they merely for shopping; most boast entertainment facilities such as food courts, restaurants, cinemas, entertainment venues and kids play areas.
Egypt does not have enough malls like CityStars, said Hesham, which are needed as a catalyst for domestic consumption and to fuel the economy as well as being a major tourism attraction.
“Egypt is already an attractive touristic destination but shopping has never been considered a touristic asset, and with new malls like this one being built around Egypt, this may soon be the case,” Hesham said.
Investors from the Gulf — such as MAF, Emaar and others — invest in Egypt for two main reasons. “First, investors find investment in Egypt favorable because of its potential and space for growth in retail markets. You also have to take into consideration that three has been in increase in the influx of tourists from Gulf states, so these malls will be built with them in mind, as well as Egyptian consumers.
“Another reason is that with so many malls in the Gulf states, the retail market is relatively saturated compared to Egypt, causing investors to be more attracted to an Egyptian market with so much potential,” Hesham concluded.
A study conducted by Retail International the shortage of shopping centers of significant size in Cairo’s new cities, high population growth, higher incomes and improving economic conditions has led to a “rash of potential new projects in the outer suburbs of greater Cairo.”
Hesham’s analysis of FDI flowing into Egypt’s real estate sector from the UAE is confirmed by another Retail International report, which states that apart from a couple of local developers, mainly SODIC, investment in most of the upcoming retail projects in Cairo is dominated by development companies from Dubai.
