The opening of Mall of Egypt on 2 March added 165,000 square metres of retail space to the Egyptian market.

Despite the recent spike in living costs, the developer Majid al-Futtaim (MAF), expects a cost recovery period no longer than nine years for the $700m project.

As shoppers flocked to the new mall in a west Cairo suburb, construction on another MAF development in the eastern suburb of Almaza continued as the Almaza City Centre mall looks to add approximately 103,455 square metres of retail space once completed 2019.

The current stock of retail space is 1.4 million square metres, not including the addition of Capital Mall (45,000 square metres) and Madinaty Mega Mall expected by the end of 2017 and the beginning of 2018 respectively.

The local Al-Hokair Group also announced plans to develop £E9bn ($500m) worth of malls in the coming years, including a project at the proposed Capital City development.

All the additional retail space has had a minimal effect on vacancy rates, which sat at 17 per cent in the final quarter of 2016 compared with 15 per cent in the fourth quarter of 2016, according to data from US real estate firm JLL.

The biggest issue facing retailers and developers is rising living costs following inflation rates of up to 30 per cent after the flotation of the Egyptian pound in November 2016.

High inflation has also come at a time of a reduction in fuel and energy subsidies as well as a newly introduced value added tax (VAT). As a result, living costs have increased drastically since November 2016, with the outlook for retail in the 2017 looking uncertain as prices continue to rise.

Although Egypt boasts a large middle class that has historically driven consumer spending in the region’s most populous country, the recent price hikes on basic goods and services has meant disposable incomes across all segments of society have contracted significantly.

Future supply is safe as Egypt’s economy looks to improve in the coming years. The shock of increased living costs will stabilise as incomes inevitably increase.

In the meantime the major opportunity for the retail market lies in the expansion of convenience, value and local brands. An opportunity will arise for local brands to improve quality and expand in order to cater for the increased market segment no longer able to afford international brands following the currency flotation.