Bloomberg News

Dubai Mall Builder Extends Egypt Expansion on Retail Strength

June 12, 2011

June 13 (Bloomberg) -- Majid Al Futtaim Group, the shopping-mall developer that built Dubai’s indoor ski slope, said the violent change of government in Egypt won’t stop the company from proceeding with its expansion plans.

“Egypt’s fundamentals from a consumer perspective haven’t really changed because of the revolution,” Chief Executive Officer Iyad Malas said in a telephone interview. Sales at the company’s Cairo mall are back to “pre-revolution levels,” he said.

Majid Al Futtaim, based in Dubai, last week asked for permission to construct a mall in Cairo with 160,800 square- meters (1.7 million square feet) of leasable space at a cost of 2.8 billion dirhams ($760 million). The company also plans to extend its Maadi City Centre development.

Egypt, the Arab world’s most populous country, attracted Gulf developers and retailers with five years of rapid economic growth prior to the revolution. Majid Al Futtaim has a shopping center in Cairo and Alexandra and owns four plots of land in and around the capital where it aims to build more, the CEO said.

The malls in Cairo and Alexandria were forced to close after being looted during the revolution, when the Egyptian regime withdrew the police from the streets, the CEO said. The Cairo mall opened again two months after its closure, while Alexandria’s mall resumed trading a month later.

Majid Al Futtaim, a privately held builder and owner of malls, is in talks with Egyptian banks to arrange 2 billion Egyptian pounds ($337 million) in financing for the new mall, which is due to open in 2014, Malas said.

‘Right Format’

Majid Al Futtaim is evaluating the “right format” for two additional malls in the country. Malas on June 6 met with Egyptian officials including Prime Minister Essam Sharaf to discuss its expansion plans in the country.

The new government “is trying to do everything it can to support investors and I think that will continue,” the CEO said. Egypt is expected to hold national elections in September.

Elsewhere in the Middle East, the company plans to complete a shopping center in Beirut by October 2012, Malas said. It’s also designing a project in Syria that will include a mall, three hotels and office and residential buildings outside Damascus, even as the Syrian government enforces a violent crackdown on pro-democracy protesters.

“At this stage the work we are doing is continuing because it involves work that’s being done in Dubai and some colleagues on the ground,” Malas said.

The first phase of the Syrian project will cost about $1 billion and the company aims to raise half of that amount from Syrian or regional banks, Malas said.

Majid Al Futtaim Group owns 10 malls and plans to double that number by 2020, according to a statement last week. The company’s Mall of Emirates includes a 22,500 square-meter indoor ski slope, the largest structure of its kind in the Middle East.

--Editors: Andrew Blackman, Ross Larsen.

To contact the reporter on this story: Zainab Fattah in Dubai on zfattah@bloomberg.net.

To contact the editor responsible for this story: Andrew Blackman at ablackman@bloomberg.net.


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