Interview: Iyad Malas

How do you foresee demand for dedicated retail property evolving in Egypt?

LYAD MALAS: According to the American Chamber of Commerce, retail growth rates in Egypt are expected to pick up, forecasted to increase at a compound annual growth rate of 16.8% by 2016. Companies in the sector are therefore keen to continue expanding in the Egyptian market. Figures also show rising demand for retail and leisure offerings, which is why the major companies in the sector are continuing to bolster their land assets for further investment over the next five years. These developments are set to add more retail space and bring new retail brands to the Egyptian market.

What sort of infrastructure is needed to ensure sufficient footfall for malls in Cairo?

MALAS: Selecting the right location for a development is extremely important. This entails examining the infrastructure and demographics within a city before a project is implemented. The infrastructure factors to be considered include accessibility and transport connectivity via car, public transport and service vehicles. Visibility from approaching roadways and proximity to good road networks that connect a mall to residential populations are also a necessity. These details all strongly affect customer footfall to a mall, which is why it is important to invest in the development of the infrastructure surrounding such projects. This ensures a pleasant and smooth experience for consumers as they approach or exit shopping malls.

What are mall operators doing to ensure their centres appeal to the greatest number of people?

MALAS: Shopping mall developers and operators are building integrated shopping and entertainment destinations in downtown and suburban sites. Research indicates a growing appetite for neighbourhood retail concepts that cater to the specific communities in which they are located and the practical needs of local residents. Super-regional malls are also being built to address the needs of a larger audience, including domestic and international tourists and business travellers. The retail mix of such developments is studied carefully to ensure that the overall consumer experience caters to different target groups.

How important is government support in implementing investment plans in Egypt?

MALAS: Government support is critical for developers to undertake expansion and plan for future developments. The Egyptian government recognises the role of local and foreign developers in the national economy and their significant contribution to the job market. The expanding retail sector has already made a significant contribution through the creation of thousands of direct and indirect jobs, which will continue to grow over the next five years.

How does the informal economy impact the sale of apparel and fast-moving consumer goods (FMCGs)?

MALAS: Egypt has seen a strong rise in household spending for apparel and FMCGs across all retail subsectors due to a continuously expanding population and increasing levels of disposable income. The informal sector comprises a large portion of the economy and employs around 40% of the country’s labour force, and it offers the supply and procurement of necessities such as food, clothing and housing appliances. By 2018 more than 72% of households in Egypt are expected to enter the middle-income bracket, which will lead to increased household spending on luxury items beyond the necessities of food, utilities and transport Egypt is also expected to see a rise in demand for furnishings and home goods, communications items, personal care services, clothing and footwear. Nearly one-third of Egypt’s population is in the 20-39 age bracket, a demographic with a strong interest in international brands that are available at large shopping malls. This demand must be met by the development of new shopping malls and the redevelopment of existing ones.