MAF to begin construction of Egypt mall this month

Dubai-based developer Majid Al Futtaim (MAF) Properties will begin construction of its Mall of Egypt this month, after almost a year’s delay as per the original schedule. MAF Holding CEO Iyad Malas says he is confident about the Cairo market despite political and social unrest and the company will persist with the project.

Malas says sales in the company’s two existing malls in Egypt, in Alexandria and Maadi, rose 24% during the height of political disturbances last year compared to 2011. According to him, Egypt is trying to attract new investment and entice those who left the country to return. “There is clearly support for Egypt, internationally. The country has to focus on key issues like unemployment, all of which need investment in growth,” Malas observes.

MAF Properties had secured $450m worth of financing to fund Mall of Egypt from a consortium of banks led by National Bank of Egypt and Banque Misr. The mall will be built on 4.3 million sqft of land outside Cairo and will include North Africa’s first man-made indoor ski resort, similar to MAF Properties’ Ski Dubai in Mall of the Emirates, about 380 retail outlets, a Carrefour hypermarket, 17-screen cinema complex and an amusement park.

The project with a total investment of $800 million will lead to the creation of 9,000 jobs during the construction phase and 7,000 once the mall opens. However, it is now expected to open only in late 2015, about a year beyond its original opening date of October 2014.

Malas says MAF Properties is also considering entering the Abu Dhabi and Riyadh markets and is already scouting for potential development locations. “We are looking at building shopping malls in both these cities in the 1.6 million sqft range and are currently scouting for land in suitable locations,” he explains.

“The company may also expand its Carrefour hypermarket into Abu Dhabi, which we see as a good option,” Malas adds.

MAF Properties plans to expand into Georgia, Kazakhstan, Armenia and Azerbaijan as well in the near future, starting with Georgia as early as this year. It will also open its first mall in Lebanon – already fully leased – in April while a second mall is planned for the new Beirut Waterfront project, with construction possibly starting this year.

The new shopping mall plans were revealed during an announcement of MAF Holding’s 2012 full-year results recently. The company, the largest private shopping mall developer in the Middle East, says its balance sheet remains strong with total assets valued at more than $10.4 billion, and $1.9 billion debt. Revenue grew 10% last year compared to 2011, to $5.9 billion. Earnings before interest, taxes, depreciation and amortisation (EBITDA) increased 7% to $817 million. Excluding currency depreciation in Iran, EBITDA grew 9%.

MAF Properties contributed about 65% of MAF Holding’s EBITDA, with revenue increasing 15% to $872 million. The company’s malls saw about 147 million visitors last year. MAF Retail, which operates the Carrefour franchise, saw 8% growth in revenue, rising to $4.8 billion, contributing 31% of the group’s EBITDA. MAF Ventures, which operates the group’s leisure and entertainment facilities, increased its revenue 11% to $220 million.