The Cairo Festival City (CFC) project─a mixed-use urban community in New Cairo─is owned by Al-Futtaim, covering an area of more than 3m sqm (700 acres).
The complex offers indoor and outdoor shopping, dining, and entertainment, and also includes villas, apartments, hotels, and automotive showrooms.
Daily News Egypt met with Mohamed Al-Mikawi, managing director of Al-Futtaim, to talk about the company’s expansion plan and the current projects inside CFC.
Al-Futtaim announced in May that it will sign EGP 1bn worth of deals with contractors in 2016. How much of that has been achieved in the first half of 2016?
We signed contracts in three projects that are being executed. The first contract includes five administrative buildings with Hassan Allam Holding. The second contract includes 250 villas and 120 apartments with the Egyptian Engineering and Trading Company (Jet) and GAMA for Trading and Contracting. The third contract is an agreement to build more than 100 apartments. The value of the contracts, which were signed in December 2015 and January 2016, exceeds EGP 1.5bn.
What projects are being executed?
The company is building 320 villas within the Oriana3 project, which have all already been sold. We are executing the first phase of Festival Living, which includes 320 apartments. Al Shafar Group will build the second phase of 350 apartments.
How much will you invest into the second phase of Festival Living?
The company will allocate EGP 700m to implement the second phase.
How many shops are leased inside CFC mall?
Currently, 82% of the shops in the mall are open, while 90% are leased. The mall includes 300 brands.
When will the cinema inside the mall be inaugurated?
It is expected to launch in Eid Al-Adha. The cinema is situated on an area of 5,000 sqm, and includes 20 cinema halls.
How many administrative offices are available inside the mall?
We are currently negotiating with a bank to lease a 3,000 sqm administrative office area during the coming week. After concluding that deal, all of them will be leased.
You mentioned that there are 300 brands inside the mall. Should we expect any new brands to open soon?
There are some brands that are interested in investing in Egypt, but they are hesitant due to the current economic situation here.
How does the US dollar shortage affect your business?
The US dollar crisis has affected almost all investors in Egypt. The shops’ lease used to be paid in US dollar, but ever since the shop owners complained about the foreign currency shortage and the increase of the exchange rate, we started accepting the rent in Egyptian pounds from Egyptian and foreign lessees. The rent is paid in accordance with the formal exchange rate.
How do you obtain required imports for your company in light of the lack of US dollars in the formal market?
We don’t buy dollars from the informal market. The parent company in the United Arab Emirates sends us the necessary raw materials.
What are the company’s expansion plans?
Each year, we target contracts worth EGP 2bn. So far, the company has invested EGP 7.5bn in the CFC project’s first phase, in addition to contracts worth approximately EGP 1.5bn this year, amounting to EGP 9bn in total. The total cost of the CFC project will reach EGP 21bn. This is besides, five administrative building are currently being constructed. We target to build grade A administrative offices for local and international companies, and will deliver the administrative offices in 2017. The project’s investments amount to about EGP 700m.
Al-Futtaim announced the launch of a sports club inside CFC. When will it be launched?
The company is currently is selecting between five Egyptian real estate consulting firms, and the winner will be announced by the end of September or early October.
Additionally, you announced that the company is trying to contract an international company to design two hotels inside CFC. Did you select the company?
We are negotiating with three international companies, and we will probably select the final company and sign with it by the end of 2016 or at the beginning of the next year.
Will the company participate in the New Administrative Capital?
We are waiting for a suitable time to study our possible participation in the New Administrative Capital. We may not participate in the first phase of the project because we are currently focusing on developing our key project, which is CFC.
Did you postpone a loan of EGP 3bn from Egyptian banks to finance your project?
As I said before, our plan is to sign annual contracts worth EGP 2bn, so we need a fund ranging between EGP 2bn and EGP 3bn. Therefore, we presented our plans to different banks, and they are all willing to give us loans. However, we did not discuss about any procedures to obtain a fund, since we don’t need it this year. We might ask for a fund of EGP 3bn next year.
How much does Al-Futtaim owe the New Urban Communities Authority (NUCA)?
The company paid more than EGP 1bn to NUCA. The remaining amount is very small, and we will pay it after NUCA registers the last small plot of land for the project.
How do you evaluate the retail market and its growth in Egypt?
The retail market is a very important sector in the country and is underserved currently. It requires large plots of lands. Its current growth is good and I expect this will continue in the coming period.
Do you think there are problems in facilitating land for retail projects?
The investor himself can facilitate land for his project, and I think the Ministry of Housing will succeed in overcoming the issue of the lack of facilitated land through partnerships with the private sector.
What other services is the company going to implement inside CFC?
The project already includes an artificial lake, which will be expanded and completed in the coming period, in addition to a school.
We are thinking of building a health project, either in the form of clinics or a small hospital. We currently have two automotive showrooms. Our target is to launch six showrooms over five years.