Mega-mall opens with high hopes

I went to cover the opening of the highly-anticipated Dubai Mall this week — one of the largest malls in the world.  I have to admit, while I was a bit distracted by everything going on in the final days of the US elections, it was a lot of fun.  The highlight for most visitors is the aquarium — the largest in the world!!! There were divers inside the tanks feeding the shark as the media walked through.  We were literally dropping our noteboks and work cameras to pose next to the tanks.  However, for me and the 2 dozen-or-so Americans I spoke to on opening day, the highlight, by far, was Taco Bell – the first ever to open in the Middle East!!!  Nothing like some tacos and a little mystery meat to make you feel at home.

Here is an audio slideshow I did from the event with photos by my pal Nicole Hill.  

Click here: Opening Day at the Dubai Mall

(the audio quality is unfortunately not great, but you get the point.

And here are some photos I snapped with my personal camera.  

 

Inside the Dubai Mall aquarium tube

 

me - a bit captivated with the fish inside the Dubai Mall aquarium tube

 

Inside the mall itself - note the not-so-subtle reminder that you are in the UAE

 

From the outside, Dubai Mall with Burj Dubai, the world

“Retail sales look very healthy”

I’ve been a bit quiet lately watching this financial monster unfold, and this seemingly endless US election campaign wrap up.  It is both an exciting and exhausting time to be a reporter in New York.  I will be back very soon.  In the meantime, I published this article today on the impact of the financial crisis in the retail sector in both the US and the Gulf. Always happy to hear your thoughts.  -vms

Vivian Salama

The National | October 21, 2008

The ups and downs of the markets are enough to make anyone invest in a crash helmet. A day of market euphoria is now often tailgated by one of nail-biting anxiety. 

However, beyond the day-to-day angst witnessed everywhere from New York to Dubai to Tokyo, the ultimate indication that the world’s number one economy may be slipping into recession came last week with news of the latest US retail sales, which offer the best indication of household demand.

Sales at US chain stores rose by a mere one per cent last month, making it the weakest sales growth of any September since 2001, when the industry was in a recession and absorbing the shock of the 9/11 attacks. Also earlier this month, MasterCard SpendingPulse, which measures US retail sales, said a steep drop in consumer spending sent its specialty retail sales index down 7.7 per cent in September compared with one year ago.

Many experts say there are more tough times still ahead for the US.

“We expect October sales to post a sluggish increase of about 1.5 to 2.5 per cent, as there is considerable uncertainty about the economy,” said Michael P Niemira, the chief economist and director of research for the International Council of Shopping Centres (ICSC).

Nearly 10,000km and a world away from Wall Street, the UAE is among the handful of countries bucking the current crisis with its love of high fashion, fast cars and shiny jewellery. Everything from car sales to computer sales and mall revenues is growing in double digits and expected to continue this way for months and possibly years to come.

“Consumption contributes a large part to the GDP and it is essential,” said Mary Nicola, an economist with Standard Chartered Bank. “In the past few years, most of the strength for western companies was driven by their growth in the emerging markets – it is a way to diversify assets.”

Worth about Dh367 billion (US$100bn), the retail sector serves as a major driving force behind the economies of the GCC and has become the second-largest non-oil industry in the region. It is forecast to grow to Dh1.8 trillion by 2010 according to Retail International, a Middle East consultancy firm. Retail spending in the UAE alone is projected to reach Dh37.4bn a year by the end of the decade.

However, a walk through any of the country’s malls reveals that the western business world may not be so far away after all. American and European stores such as Saks Fifth Avenue, Debenhams, Versace and Bloomingdales continue to pop up at shopping centres across the country, sending subtle reminders of the international crisis at hand, despite continued prosperity here in the region.

For instance, US sales at Saks Inc, which owns Saks Fifth Avenue stores, decreased 10.9 per cent for the five weeks ending on Oct 4. All the while, Saks Fifth Avenue has continued its expansion throughout the GCC, with the latest location due to open in the Dubai Marina. Similarly, Bloomingdales will make its debut in the region with the opening of the massive Dubai Mall next week, just as its American counterpart announced it is slashing prices by as much as 60 per cent on various items in an effort to lure buyers back into stores.

In today’s global economy, some experts believe it is foolish to take such news with stride. 

“Nobody likes uncertainty, so obviously it is going to have an impact on any kind of business, including retail businesses,” said Naeem Ghafoor, the chief executive of Skyline Retail Services Consultancy. “Luckily, our whole credit system works differently here in that we are a more cash-oriented part of the world than the US.”

Ajay Dayal, the general manager of retail and marketing for Easa Saleh Al Gurg, the holding company with brand names including United Colors of Benetton and Siemens appliances, said the UAE must now play the “wait and watch game”.

“I think we are over the first hump,” he said. “I get the feeling that sentiments will not get hurt because the government has come in so strongly and supported the banks and made sure liquidity is continued.”

Since the beginning of October, all seven Gulf bourses have fallen sharply. Dubai suffered the most, falling 22 per cent; Abu Dhabi was down 13 per cent and Saudi Arabia, Qatar and Oman were all down by 15 per cent. Still, many believe this is merely in reaction to the global market climate and is in no way an indication of the region’s economic stability. 

Moreover, the strong purchasing power in the region, it is believed, will continue to fuel growth in the retail sector. Figures released this week by the Ministry of Economy revealed that private spending, which includes household expenditure on food, rent, education and other goods and services soared by nearly 18 per cent to an all-time high of Dh290bn last year.

“Retail sales look very healthy in the region at the moment and we haven’t seen any drop-off like you see in the US and Europe,” said Shahram Shamsaee, the senior vice president of retail for MAF Shopping Malls. “Here, access to credit is a lot stricter, there are a lot more restrictions on borrowing and you have to be employed to be able to borrow.”

Others attribute the region’s stability to the franchise business model, which requires international companies to partner up with local holding companies. There are several benefits to franchising a business, say industry leaders. The biggest draw is it generates income, and it fuels business growth with minimal risk and minimal capital investment. It also increases the potential for market penetration while minimising operation costs and expenses.

“It is a way to diversify your assets and minimise exposure essentially,” said Ms Nicola. “US and European assets aren’t doing so well nowadays, so they turn to partner up with businesses here so that they maintain their chances for growth.”

In fact, the Gulf has become an oasis from the global economic downturn that has seen millions of cash-strapped consumers in the West cutting back on spending, with many brands turning to the GCC as a means to survive tougher times.

Figures released by the regional car industry estimate that the combined market for cars and light lorries in the GCC will increase about 10 per cent to 1.2 million vehicles this year. 

General Motors America reported losses of $8.5bn in revenues in the second quarter of this year compared with the same period last year, while in the Middle East, Africa and Latin America, the company increased second quarter sales by $1.7bn.

Luxury brands have done even better. Lexus UAE reported a 50 per cent increase in year-on-year sales for the first half of this year, while Lexus sales in the US were down by 15 per cent for the same period.

Far from feeling the pinch at the pump, drivers in the Gulf enjoy subsidised petrol, making heavy-duty 4×4s a common sight on the UAE’s roads.

Similarly, in the Middle East the PC maker Dell posted 55 per cent growth in unit sales in the second quarter compared to the same period last year, according to company figures based on International Data Corporation information, whereas in the US, Dell sales grew by a mere 5.8 per cent. Acer, the world’s number three PC maker, reported regional sales were up more than 54 per cent in the first quarter, while sales slumped 20 per cent in the US for the same period.

While Emiratis actively contributed to retail sales, the buying power of the country’s expatriate residents – who make up more than 80 per cent of the population – was the major source of success, a study by the Delhi-based RNCOS found. 

Tourism is also a massive factor stimulating growth, with the UAE expecting more than 11 million tourists annually by 2010. However, with dire economic conditions in Europe and North America, many travellers are likely to stay closer to home. Last month, ABTA, a leading UK travel organisation, warned that the UAE must do more to develop its budget hotel sector or risk losing tourists to cheaper destinations.

“There may be a drop in pure tourist traffic because people coming from the West may feel a bit threatened, but we have to wait to see how the winter season is impacted,” said Mr Dayal. “Let’s wait and see – it shouldn’t be too bad.”

Retail Developers Head to India

Vivian Salama

The National | September 16. 2008 8:35PM UAE

MUMBAI //Reforms to India’s once obstructive foreign direct investment policies are seen as the driving force needed to ignite the country’s buoyant retail industry by luring property developers from around the world.

Previous barriers, including excessive red tape, have stalled progress to seize the massive opportunities that India’s retail property market has to offer. 

However, policy reforms at the start of this year have opened the doors for more companies to take advantage of India’s booming retail sector.

“The market in the UAE will get saturated very soon, so retail developers have to look at other markets,” said Shavak Srivastava, the managing director of Sq.Ft. Consulting UAE, based in Dubai. “India has had a lot of restrictions as far as foreign investments, but this is now changing. We will see a lot of developers going into the country.”

Worth approximately US$350 billion (Dh1.28 trillion) a year in sales, India’s retail sector is expected to woo more than $35bn in investments in the next five years, according to the consultancy Technopak.

Currently, foreign developers can undertake construction activities within a space of 50,000 square feet. 

However, the Indian government is under pressure to raise that ceiling to facilitate higher foreign direct investment in the property sector. While there have been improvements to government policies, industry leaders say more needs to be done.

“There is still a lot of work needed to clean up the mess in the system,” said Ashwin Puri, the chief executive of Property Zone, a retail property consultancy. “Traditionally, Indian development companies were family-run, so they tended to keep things close to themselves, but now they are beginning to grasp the benefits of foreign investments, so I think we will see a lot of changes to come.”

Only six to seven per cent of India’s retail industry is “organised”, with small businesses traditionally dominating the sector. However, the growing spending power by the country’s emerging middle class has created a massive demand for broader, more diverse retail options.

“Around 300 million people are considered part of the middle and upper middle class in India,” said Mr Srivastava. “All of these people are potential consumers, so there is a huge potential and much more than anything that is offered in the Gulf.”

Malls, not private shops, are the order of the day. About 300 mall projects are currently under way across India, many of which cover more than one million sq ft. More than 100 million sq ft of gross leasable area (GLA) is due for completion by the end of the year, according to India’s Associated Chambers of Commerce and Industry (Assocham).

Numerous UAE-based developers are already tapping into the Indian market in search of new and prosperous opportunities. Emaar MGF, the property developer’s Indian subsidiary, has the most established presence in the country with a number of projects in the works including Central Plaza, a shopping centre in Mohali Hills in Punjab. 

A spokesperson for Emaar MGF said the company planned to contribute approximately 18 million sq ft of retail space and 55 million sq ft of residential development across India by 2010.

Last year, Dubai-based Al Fajer Properties announced a joint venture to create a property fund in India to facilitate investments by small investors in Dubai. Majid al Futtaim Group is also studying opportunities, although no deals have been finalised.

Lulu Group, a subsidiary of Emke Group, also recently started construction on a mixed-used development in the Indian city of Kochi, set to be one of the country’s largest shopping centres. The Dh1.2bn multiplex will include a shopping mall, a five-star hotel and a tower geared exclusively for travel and tourism businesses when it opens in 2010.

Despite the ease of foreign investment restrictions, a number of obstacles still stand in the way of real investment in India’s retail sector. 

The land acquisition process is long and tedious, often deterring companies from carrying through with the process. Skyrocketing property prices have also been a concern, however prices have eased in recent weeks. One of the biggest concerns of industry leaders is the lack of domestic training and experience for properly exploiting the market.

“The country really needs to clean up the mess of the system,” said Mr Puri. 

“India has the resources but doesn’t have experience, and I think that is where a lot of the more developed markets, like those in the GCC, come into play.”

Counting the rising cost

Vivian Salama

The National: July 29. 2008

The world’s insatiable appetite for oil has hit UAE shoppers in their stomachs as well as their wallets with spiralling food costs. And the problem appears to be growing.

Consumers are paying more for everything from a bag of rice to a carton of eggs, simply because it takes oil to run farm machines, power the processing and packaging factories and fuel all modes of transport. 

“Food prices are directly correlated to oil prices,” explains Marios Maratheftis, the head of research for Standard Chartered Bank. “We can’t sell US$140 barrels of oil then expect food prices to go lower.”

In recent months higher oil prices have manifested themselves locally in the form of higher commodities prices, the pain of which is passed on to consumers. 

As the most demanded staple food, rice has soared to unprecedented levels, with global prices up from $650 (Dh2,386) per tonne to a 25-year high of $1,000 in just the first three months of this year. A decision by India’s government to halt exports of non-basmati rice – in an effort to curb prices and avoid domestic shortages – has exacerbated the situation here, driving prices even higher. India’s move has been widely criticised by UAE retailers whose businesses thrive on sales of the grain.

“We have a lot of Indian people here who want to eat their rice, even if the price of basmati rice keeps getting more expensive,” says Burham Turkmani, the general manager of Al Rabiah Trading in Dubai. 

Khaled Zanul Abid, the manager of Talal Supermarket in Jebel Ali, agrees. “I am Indian, so I know how my customers feel. They like to eat certain kinds of rice from India. But they have to eat, even if the price gets very high,” he says. “Everything is becoming so expensive for the people now.”

Food inflation is foremost among concerns of the federal government, which reported a 11.1 per cent jump in inflation last year. Although inflation has largely been driven upwards by rents, food, beverages and tobacco accounted for 11 per cent of the rise and are believed to contribute as much as 30 per cent to overall GCC inflationary pressures. According to the Emirates Consumer Protection Society, domestic food inflation could rise as high as 40 per cent this year.

Experts say cheap ingredients are being passed off as 

“Inflation will not go away,” warns Andy Barnett, a professor of economics at the American University of Sharjah (AUS). 

“Problems will continue indefinitely until people give up and let the underlying adjustment that’s taking place take hold.”

Various measures – some more controversial than others – have been taken to ensure that the situation does not spiral out of control. The initial response was price caps. Earlier this year the Government signed agreements with various domestic retailers including Baniyas Co-operative Society, Carrefour, Union Co-operative Society and LuLu hypermarkets for implementing price caps on items such as chicken, rice, flour and eggs in an effort to combat rising prices set by suppliers. In April, the Government announced it was stockpiling more than a dozen “essential” food items to reduce the likelihood of food shortages, often a backlash after price caps. One month later, officials with the Economy Ministry announced that 15 items – including dry and condensed milk, frozen and canned vegetables, baby food, chicken, edible oil, rice, flour, fish, meat and tea – were to be placed on a free import list in a bid to contain inflation.

“Price caps should be on the suppliers, not the retailers,” says David Berrick, the retail general manager of Abela Supermarkets, which has a domestic headquarters in Abu Dhabi. “They’re implementing these policies on just 16 or 20 commodities. What about the other 20,000 products in our supermarket? We can lower our prices and use the marketing tool of ‘everyday low prices’, but if supplier costs go up, we have no choice but to raise prices.”

Click here to read more….

Egypt Hard Hit by Inflation

This is an audio feature I recorded while on assignment this week in Egypt.  It’s a wrap of my coverage.  

Click here if you’re interested.

Saudi Rides the Retail Boom

by Vivian Salama

The National

Just a few minutes walk from the Great Mosque of Haram, a shiny new mall will soon open, featuring the likes of Tiffany and TopShop.

To many, this is just another example of rampant globalisation. To others, it is a simple business opportunity.

Brands as diverse as Hugo Boss and Juicy Couture are jostling for a foothold in Saudi Arabia, leaving the kingdom caught in a dilemma between commerce and reverence.

“Some people see it as McDonaldising the world, putting a KFC or a Starbucks a few metres from [Masjid] al Haram, but we are traders and for us, Saudi Arabia offers a great opportunity,” said Khalid al Sehaibany, the leasing director for Mohammad al Habib, a Riyadh-based developer.

As the religious centre for 1.2 billion Muslims and home to over 20 per cent of the world’s proven petroleum reserves, Saudi Arabia has long trod a fine line between its desire for prosperity and attachment to tradition.

Now the kingdom is striving to foster an improved business climate as, like many oil-producing countries, it seeks to decrease its oil dependency. As with other GCC countries, retail has the potential to become a significant contributor to the economy.

While much attention has been focused on the UAE, analysts say that Saudi Arabia is on its way to becoming a regional retail leader. Worth US$6 billion (Dh22bn), the sector in Saudi Arabia holds second place regionally after Dubai’s.

Some seven million square metres of new retail space are due for completion in the kingdom by 2010. Fuelled by these projects and a rapid population growth, sales are forecast to increase at a healthy five per cent per year until the end of 2012.

“This is a country with a lot of potential,” said Naeem Ghafoor, the chief executive of Skyline Retail Services. “The people have money, are well travelled and well cultured.”

As in most countries in the region, malls function as entertainment centres, providing people of all ages with a safe and culturally acceptable gathering place. The retailers reap the benefit of this guaranteed footfall. However, the enormous spending power of Saudi Arabia’s 21 million citizens is the real force behind the sector’s massive potential.

“Saudi consumers have the strongest purchasing power in the GCC,” said Mr Sehaibany. “They have money and they like to shop. What more can the [retailers] ask?”

According to government estimates, the average Saudi per capita income has grown 10.6 times, from about 5,083 Saudi riyals (Dh4,978 ) in 1971 to about 55,216 riyals in 2006. As a result, the kingdom finds itself in a mad rush to meet the demand for bigger and better residential complexes and shopping centres.

To reach more, click here.

Building a Green Dream

 

By Vivian Salama

The National

While the UAE’s explosive development attracts admiration from around the world, ecologists are deeply worried that the country is consuming resources at an unsustainable rate.

The UAE has come in for harsh criticism from environmental awareness groups such as the World Wildlife Federation (WWF).

In its Living Planet Report last year, the WWF said the UAE used more biologically productive land to provide resources and more seawater to absorb waste than any other country proportionate to its size.

“The UAE is living as if they have 6.6 planets,” said Ian Cheshire, the chief executive of Kingfisher, a UK-based home furnishing centre.

“At the risk of naming and shaming … sustainability is just not there,” Mr Cheshire told delegates at last month’s World Retail Congress in Barcelona, citing the Living Planet Report.

With an annual population growth of more than five per cent driving an ever-mounting demand for retail and residential space, plus extreme summer temperatures, UAE society is guzzling resources.

“The whole business model is based on much higher resources,” Mr Cheshire said, conceding that the UAE’s intensive expansion put it at a disadvantage to countries such as the United States and the United Kingdom, which experienced their growth booms more than a century ago. 

“It’s to be expected,” he said. “The key in the UAE now is to make it more manageable.”

Click here to read more…

Retailers Seek Relief from Importers

 

By Vivian Salama

The National

DUBAI // Tensions are brewing between UAE-based importers and food retailers over ways to ease the burden of rising commodity prices. Record prices on staple items such as rice and wheat have left supermarkets scrambling for solutions to help customers cope.

“We’re not shying away from our responsibilities,” said V Nandakumar, a spokesman for Lulu hypermarkets, which signed a memorandum of understanding last month with the Ministry of Economy implementing price caps on 32 basic items. “From the wholesalers and importers and suppliers, we hope that they also follow similar price caps or some kind of measures to curb the [impact of] inflation.”

However, according to Burhan Turkmani, the general manager of the Dubai-based Al Rabiah Trading, importers are at the mercy of global exporting countries as market prices on commodities continue to climb.

“We are dealing with exporters and brokers outside this country, so the price is out of our hands and in their hands,” said Mr Turkmani, whose company imports staple foods from countries including Thailand, Vietnam, Pakistan, India and Egypt.

Various factors, including limited water and agricultural land, force countries in the Gulf to rely heavily on imported food items. The UAE imports nearly 85 per cent of its food. However, more than 70 per cent of all UAE food imports, worth Dh11.01 billion (US$2.9bn) annually, are then re-exported to markets around the world, including other GCC countries, the Indian subcontinent, North and East Africa, and the Central Asian Republics.

Global rice prices jumped from US$650 to US$1,000 a tonne in the first three months of this year, reaching a 25-year high. Last week, Thai rice surged to a record US$1,000 a tonne, three times its level in January, and India’s export prices for basmati rice rose from US$1,100 to US$1,200. In March, India halted exports of non-basmati rice as a way to curb rising prices and avoid domestic shortages, a move that has attracted strong criticism from UAE retailers, whose customers include the 1.4 million Indian nationals living here.

According to Riaz Hussein Bhojani, the general manager of a Dubai-based importer, Rashwell Company, the landed price of Pakistani basmati rice is now Dh5,505 a tonne, up from Dh2,569 last year. Mr Bhojani said he now paid as much as Dh230 for a 39kg sack of Pakistani basmati rice. Al Rabiah pays about Dh160 for each 38kg bag of Indian basmati rice, up from Dh115 last year.

“There is absolutely no point in putting a cap on anybody without listening to the importers,” said Mr Bhojani. “The Government needs to form a price committee and then take people from the importers and from ministry and maybe some retailers and find solutions.”

This week, Baniyas Co-operative Society followed the lead of larger retailers such as Carrefour, Union Co-operative Society and Lulu hypermarkets by implementing price caps on dozens of basic commodities in an effort to ease the burden of inflation. Many retailers fear that price caps will ultimately result in losses since they are buying their commodity stocks at one price but selling them for less.

“Price caps should be on the suppliers, not the retailers,” said David Berrick, the retail general manager of Abela Supermarkets. “We can lower our prices and use the marketing tool of ‘everyday low prices’, but if supplier costs go up, we have no choice but to raise prices.”

Mr Turkmani said he understood the concerns of retailers. However, suppliers are being faced with similar challenges. “If importing costs go up, then we are left with no choice but to boost our prices,” he said.

This week, the Ministry of Economy urged retailers to start stockpiling basic food items to prevent shortages caused by export bans in countries such India, Egypt and Brazil. The ministry has also urged local retailers to consider eliminating the middlemen when importing 15 basic commodities as a cost-cutting measure.

“It’s cheaper for the hypermarkets to buy from the farms directly because it eliminates the costs from middle agencies plus it encourages greater sales competition, which ultimately benefits the consumer,” said a spokesman for the Emirates Society of Consumer Protection.

Mr Turkmani objects to such alternatives, saying the industry will suffer major consequences. “Retailers don’t have the experience to deal directly with the farmers,” he said. “We know the best locations, have the best contacts, and can find the best quality of food out there. Eliminating importers would be a mistake.”

The chief executive of Carrefour shares the Government’s sentiments. “We are obliged to find new resources,” said José Luis Duràn last month at the World Retail Congress in Barcelona, Spain. “We must ask how we can work directly with farmers to ensure sustainability, good quality, with reasonable prices.”

Ultimately, said Mr Nandakumar of Lulu, dialogue between regional retailers and importers had thus far been counterproductive. “We are having a blame game here,” he said. “We did our part. Now some kind of initiative from the suppliers and importers must be done to gain the confidence of the country.”

Abu Dhabi poised for shopping boom

By Vivian Salama

The National

Abu Dhabi’s retail industry could soon yield higher sales per capita than Dubai, with spending power in the emirate expected to surpass Dh7.34 billion (US$2bn) by next year, according to research by the property consultant, Colliers International. 

“The outlook for Abu Dhabi is bullish,” John Davis, the chief executive of Colliers, said yesterday at the Middle East Council of Shopping Centre’s (MECSC) annual convention.

Retail sales in Abu Dhabi must increase by 19 per cent for it to sustain its performance per capita, while sales in Dubai must grow at the rate of 35 per cent to achieve the same performance, partly due to the growth in tourist numbers.

Mr Davis said the gross leasable area (GLA) for retail space in the capital was expected to grow by 122 per cent within two years.

Malls account for almost 60 per cent of Abu Dhabi’s total retail GLA, with non-mall GLA representing less than 300,000 square metres. According to the Colliers data, the occupancy rate at malls across Abu Dhabi averages about 90 per cent, while the shopping centres in Dubai are all nearly full.

Several factors are expected to lure more brand names to Abu Dhabi in the coming years. Retailers pay considerably lower rents in the capital, with the average annual cost ranging from Dh3,486 to Dh5,505 per square metre at prime shopping centres such as Marina Mall, Abu Dhabi Mall and Al Wahda Mall. In Dubai, at Mall of the Emirates, Ibn Battuta Mall and Burjuman, rents range from Dh4,404 to Dh6,606.

“The spending power of the Abu Dhabi nationals is obviously very, very high, Mr Davis said. “You’ve also got companies like Etihad, for example, which are really working to bring people from around the world directly to Abu Dhabi, so that will have a positive impact on the retail sector as well.”

The major players in Abu Dhabi’s retail property sector, including Aldar and the National Investment Corporation (NIC), are actively pursuing ambitious new projects throughout the emirate. Several new malls will be opened in the capital in the next few years, including Dalma Mall, scheduled to open next year, as well as the Central Market, Deerfields, and phase III of Marina Mall, all scheduled for 2010.

vsalama@thenational.ae

Developers keen to invest in Cairo

 

by Vivian Salama

The National

 

UAE retailers are looking to expand operations beyond home shores and for some, Cairo is the next big investment opportunity.

“This is a place that changes on a monthly basis – it’s absolutely booming,” John Davis, the chief executive officer of Colliers International, said yesterday.

Cairo has generally been ignored in the rush to satisfy surging consumer demand in the Middle East. However, with the recent relaxation of trade duties, which have dropped from nearly 150 per cent to 20 per cent, a pent-up demand for international consumer brands has been unleashed.

“Before, the barrier to entry for retail merchandise, textiles in particular, made it impossible to enter the market,” Mr Davis said.

As a result, a number of developers based in the UAE have moved into the greater Cairo area. Al Futtaim Group has begun work on Cairo Festival City, a 154,000 square metre indoor-outdoor shopping and entertainment centre, similar to its namesake in Dubai. The mall will feature 250 shops and services, as well as 85 restaurants and cafes.

“What’s happening in Cairo is that there’s a lot of international investment coming in,” said Peter Young, the director of retail development for Al Futtaim Group Real Estate.

Emaar has invested Dh20.33 billion (US$5.54bn) in Egypt, including a Dh7.7bn development in Uptown Cairo and the Dh2.57bn Cairo Gate, a commercial and residential development.

Majid Al Futtaim Shopping Malls has purchased 400,000 square metres in central Cairo for five new malls. The group also plans to expand existing centres in Maadi and Alexandria.

And last year, Damac Properties announced a number of ambitious projects in Egypt, including Park Avenue, a four million square metre mixed-use centre. It plans to build the New Cairo project, which will house residential and commercial properties over a 6.3 million square metre area.

The Egyptian retail sector will not be as dependent on tourism as it is in the UAE. Instead, it will focus on the domestic market.

Egypt’s gross domestic product is forecast to grow by eight per cent by 2012, with total retail and leisure expenditure in the primary and secondary trade areas projected to reach 28.5 billion Egyptian pounds (Dh19.25bn) in 2009, rising to 79 billion Egyptian pounds by 2016. The population is 78 million, the highest in the region, and is expected to rise to 90 million by 2020.

“The population is absolutely massive in Egypt,” said Mr Davis. “So it’s a very attractive market for retailers to get into.”

vsalama@thenational.ae