Egypt remained in turmoil this week, with thousands of workers out on strike to demand better pay and working conditions.
The military council that took power from Hosni Mubarak last Friday said strikes and protests were stalling efforts to salvage the economy after the 18-day revolt that forced the president out of office.
On Wednesday the council issued a renewed call for an immediate halt to industrial action, raising expectations of an outright ban on protests that could in turn raise further tensions in the country.
Among those watching from the sidelines – and trying to make plans for the future – are a large number of overseas retailers and property investors with a presence in the country.
As a consequence of the uprising, the Egyptian economy has so far suffered billions of pounds of lost business. For the UK, it has resulted in investor uncertainty as well as retail and supply problems for British retailers.
Department stores Marks & Spencer and Debenhams shut their respective stores in Cairo and Alexandria, although M&S says the Cairo store was closed for a week and a half, as a precautionary measure only.
Retail investors and developers have been flocking to Egypt in recent years, owing to its large and youthful population, the emergence of a more affluent middle class, a vibrant tourism industry and a growing acceptance of modern retail concepts.
A predicted 26% increase in retail sales over the next three years to E£223bn (£18.5bn) had also helped to attract interest from overseas retailers and investors.
Last November, UK fund manager Pradera joined forces with Palm Hill Developments to create an $800m (£496m) fund to buy and manage shopping centres across Egypt, and several developers have been creating vast shopping centres across the country, hoping to service an undersupplied market. But could that now all be in jeopardy?
Dubai-based Al-Futtaim Group Real Estate, is developing the Cairo Festival City, a 32m sq ft mixed-use scheme comprising shops, dining, entertainment, hotels, homes, offices, schools and an automotive park.
Scheduled to open in 2012, M&S has already agreed to open a store and John Lewis is poised to sign as an anchor store (27 November 2010, p37).
However, the recent unrest has inevitably raised question marks over the stability of the project and hence future developments.
The group says: “You will appreciate that we are coming through a very difficult period of uncertainty and until we can be more specific, we will be saying very little.”
And a report by CB Richard Ellis published as Mubarak stepped down warns that, while Egypt is still a major opportunity for investors, political risks and “structural ambiguity” present significant concerns.
M&S seems less worried. “There’s no change to any of our future plans with regard to new store openings in Cairo,” it says.
Ian Gladwin, chief executive of Cluttons’ Middle East business, adds that, while there is “genuine concern about what the expectations of the people will be from now”, international corporations are still optimistic about prospects in Egypt.
He says that one reason for this is that the fundamentals are still very good because of previous reforms, and a youthful population looking to progress.
“There are opportunities to do business cheaply there in the next three to six months,” says Gladwin. “There is still a vast shortage of good-quality stock, particularly in Cairo.”
As for the rest of the region, the repercussions of what is happening in Egypt are being watched closely.
CBRE says: “There is no way of telling whether a “domino effect” will take hold with respect to other economies and governments in the region. We will only know when the situation in Egypt has played out further.”
Political risks and “structural ambiguity” present significant concerns
“There are opportunities to do business cheaply there in the next three to six months”
