Coffee with Ahmed Ismail, CEO of Majid Al Futtaim Properties: Egypt is a country that has no public space to speak of — no urban parks or preserves in which to picnic, to allow the children to roam wild, or in which teens can kick a ball around. And even if we were so blessed, there are long stretches of the year in which the temperature dictates looking elsewhere for entertainment.

Perhaps more than anything else, that’s why the narrative on malls in MENA is so different from the one in Western markets. Across the pond, it’s about declining same-store sales and contracting gross leasable area. Blogs and haunting photography of dead malls are literally a thing. In our corner of the world, the story is growth — as anyone brave enough to venture near a shopping mall on “Black Friday” discovered.

Egypt’s newest mall is the USD 580 mn City Center Almaza, Majid Al Futtaim’s latest flagship, which opened last Thursday (see our past coverage here).

MAF prides itself on providing a regional platform for brands including Carrefour, Apple, Tods and Céline. MAF is unusual by any measure: A home-grown retail giant, it is privately held but both governed and managed independent of the founding family and has been an investment-grade company independently rated by Fitch for seven years now.

After expanding out of the Emirates, its top line is now north of USD 8 bn annually and it is on track to turn in EBITDA of more than USD 1.2 bn this year. With an asset base of some USD 13 bn, it has 26 shopping malls spanning from the UAE to Egypt, with a portfolio of own brands including Vox Cinemas and license agreements with global names including Carrefour. Some 7,000 of MAF’s 45,000 employees are in Egypt; there’s a big Egyptian presence in MAF’s top ranks, and 99% of the team in Egypt is Egyptian.

Among them is MAF Properties CEO Ahmed Ismail (bio), a 13-year MAF veteran tapped to lead Majid Al Futtaim Properties a year ago. Prior to his appointment as CEO, Ismail served as the CEO of Majid Al Futtaim Ventures for 10 years overseeing seven business verticals including fashion retail, leisure and entertainment, cinemas, financial services and facilities management. He was a principal with Booz Allen Hamilton in Dubai before joining MAF.

Edited excerpts of our conversation:

Enterprise: What’s Egypt to MAF?

Ahmed Ismail: We are long-term investors, full stop. Egypt was our first market outside the UAE, and we take a 30-year view on the investment. It’s how we think about growth. We’ve invested EGP 26 bn here, up from the EGP 22 bn we projected when we attended the Egypt Economic Development Conference in Sharm El Sheikh back in 2015. We invested in the run-up to the float of the EGP, and we invested afterward.

E: That kind of horizon is challenging for many businesses.

AI: Of course, but look at it this way: I read in Enterprise the other day that corporate earnings have now recovered to pre-devaluation levels in USD terms. That’s so fast. And it’s simple to see why: Look at the demographic trends. Look at the reform program. Look at the recovery in tourism. Our business in Egypt is growing in the double digits. Occupancy is north of 90% and we will have 37 mn visitors to our malls this year and are targeting 50 mn next year across our City Centers and flagships Almaza and Mall of Egypt. We have nearly 60 Carrefours in Egypt, and we are now aiming for 100.

That’s what we’ve gotten out of taking a long-term view, and we’ve sold that vision to our bondholders. We’ve tapped capital markets with hybrid, Islamic, and traditional issuances at competitive rates for 10-year periods. Global investors understand the potential of the retail story in Egypt and the wider MENA region.

E: The business model must be calibrated to allow that, right?

AI: Absolutely. As we expand into new markets, Carrefour is our beachhead. It’s capital-light and allows us to understand our customers and benchmark the quantum of demand. First we gather the data, then we roll out the more capital intensive businesses.

E: One of the theses popular in Cairo is that retail demand will soften because disposable incomes have been eroded and consumers are now struggling to seek finance. What accounts for the durability of consumer sentiment?

AI: We don’t offer consumer credit, so I can’t speak to that, but I do know that consumer debt as a fraction of GDP is very low. What we see is continual growth in traffic, and we’re seeing our tenants report growth in sales that’s beating inflation. The average basket is essentially keeping up with inflation, and the growth is being driven by more people coming in spending more time and purchasing. Getting the footfall is all about offering the right experience — then it becomes about conversion and average basket.

We expect traffic at north of 50 mn visitors this year, and we’ll see same-store growth of 12-15% this year. Store operators with great brands who take consumer experience seriously will do well, they’ll see double-digit growth. Those who are less up-to-date will see contraction.

We collect data — tenants offering high quality experience are doing double digits and those who focus less on customer experience and less up to date are contracting. Consumer demand is quite robust.

E: What are the global brands you do business with saying about Egypt right now?

AI: A lot of the global brands now see Egypt as a very good growth opportunity. The turnaround in the economy and consumer sentiment in three years has really encouraged them to invest again in growth — and many brands not already here are now considering moving in. Nike opened their first flagship store in Egypt at Almaza; Zara brought their new retail concept to Egypt for the first time. Armani Exchange and Hugo Boss are opening their own stores.

Brands on the luxury side are particularly encouraged by the turnaround in tourism, which is bringing a new type of visitor to Egypt who is spending more. Investing in retail and the infrastructure to support it isn’t just an investment in retail — it’s a critical part of Egypt’s tourism infrastructure that will have more and more impact the more it’s built out.

E: How does it feel to be in the brick and mortar business when e-commerce is coming for us all?

AI: There’s no question that online shopping is growing — it’s easier to do when the total penetration is in the single digits. Many of our own brands have robust online presences, including Carrefour, Crate & Barrel and Vox. But it’s a big question: How do we compete when anyone can order almost any piece of merchandise at a great price and have it delivered even the same day?

It’s simple: Customers in MENA don’t only want merchandise. They long for social and entertainment experiences — and an experience that goes beyond the value of a shoe or bag or shirt. It’s why we are a company that’s all about experiences — in entertainment, in food and beverage, in cinemas. It’s the same for our brand partners: When time-starved customers are looking to save time, they do it online. When they have time, it’s about the experience and social interaction. Retailers and brands that don’t understand that will find it difficult to compete.

E: Last question: Is it true you’ve brought self-checkout to Egypt?

AI: Yes, at Carrefour. Scan and go is now here and 10% of our sales are scan and go. The Egyptian consumer is hungry for the great retail experiences of the future.