Saudi retail property developer shows faith in Egypt
By Asma Alsharif
CAIRO, March 22 (Reuters) - Saudi-owned retail property developer Marakez is investing 15 billion Egyptian pounds ($829 million) in Egypt and could double that within five years as the country pushes through economic reforms.
Egypt, the most populous Arab country, has been trying to revive its economy since a 2011 uprising ushered in an era of political and economic turmoil, deterring tourists and foreign investors that were major sources of hard currency.
Those efforts received a boost in November when Egypt floated its currency, devaluing the pound, and agreed $12 billion of funding from the International Monetary Fund to support its economic reform programme.
"Three months ago a lot of investors were looking and just seeing a brick wall that we were about to crash into," Marakez Chief Executive Ahmed Badrawi told Reuters.
"They were not seeing any light at all. But after the devaluation, I think a lot -- especially foreign investors -- now see that things are cheaper and that there is a plan and it looks like they will stick to the plan."
Marakez, an Egyptian subsidiary of Saudi Arabia's Fawaz Al Hokair Group, established Egypt's biggest retail mall on a 200 acre site in Cairo's 6th of October suburb in 2011 and is now planning on developing three others in addition to its first residential project in Cairo.
Fawaz Al Hokair Group has retail and real estate operations across the Middle East, North Africa, the United States and Central Asia.
"The group took the view in 2015, when Egypt was pretty much in the thick of it and times were very bad, that we are long-term investors," Badrawi said, adding that its projects will become operational three or four years down the line as Egypt's recovery programme begins to bear fruit.
Marakez will start the second phase of its Mall of Arabia -- a 42,000 square metre extension -- next month and is also planning to launch the residential project on a 21 acre site next to the mall.
It also acquired two sites for malls in the east of Cairo and a third mall in the underdeveloped city of Tanta.
"All of these decisions are taken with the retail background in mind," Badrawi said, pointing to an Egyptian consumer base of 93 million people.
"My investors are ready to pour a lot more money in ... I think that there is scope for double the size of the investment within five years."
While more than $3.5 billion in foreign investment has flowed into Egyptian Treasury bills and bonds since the currency was floated, direct foreign investment in Egyptian projects has yet to attract the same level of interest.
Among efforts to address that is a proposed investment law aimed at slicing through Egypt's notorious red tape to make it easier and quicker for investors to do business, though the legislation has yet to pass through parliament.
Investors also remain concerned about the repatriation of profits, with Egypt still facing a foreign currency shortage and banks prioritising dollar allocations for imported goods.
In 2015/16 Egypt attracted about $6.8 billion in direct foreign investment, but Finance Minister Amr El Garhy said on Monday that he is optimistic that renewed interest in Egypt after the devaluation of the pound will lift the total to between $13 billion and $15 billion in the next financial year.
"A lot of investors have decided that Egypt is now a place where they want to invest ... there is a lot of serious investment money now looking for opportunities," Badrawi said.
"If there is a good economic development path, then more and more of these guys will come in. So as a group, (our) investors took the view last year, ‘let’s go for it’." ($1 = 18.1000 Egyptian pounds) (Editing by David Goodman)
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