How Majid Al Futtaim is getting to grips with the coronavirus ‘tsunami’

The cinema is one of many owned by Majid Al Futtaim (MAF) across the Middle East, Central Asia and Africa. (Supplied)
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Updated 05 May 2020

How Majid Al Futtaim is getting to grips with the coronavirus ‘tsunami’

  • Alain Bejjani, MAF’s chief executive, discusses the state of business in era of coronavirus
  • Conglomerate committed to its target of opening a total of 600 Vox screens in Saudi Arabia

DUBAI: Alain Bejjani is in no doubt about the destructive power of the “tsunami” that has swept over the world with the coronavirus pandemic.

The chief executive of Majid Al Futtaim (MAF), one of the biggest and best-known conglomerates in the Middle East, told Arab News: “This is beyond business. This will change how we live on this Earth as human beings in societies. The coming 10 years will be marked by the reverberations of this crisis.”

MAF is at the sharp end of the interface between consumers and business that has been transformed by the pandemic.

Its malls and Carrefour supermarkets provide life-sustaining supplies for millions of people; its Vox cinemas, hotels and other leisure facilities provide the rest and recreation they need in what passed for a “normal” life before the lockdowns.

MAF’s CEO Alain Bejjani. (Supplied)

The malls — 27 of them across the region — have been at the front line, both as a business and as an essential service.

Bejjani pledged early on in the crisis that workers in the Carrefour business would not be laid off, nor have their pay reduced. He also announced a rent freeze for trader tenants in the malls. He is sticking to both commitments.

Staff from locked-down areas such as cinema and leisure businesses have been retrained and redeployed in the supermarket operations, and nobody has been laid off so far for anything other than normal employment issues.

On the pay promises to staff, he said: “They’ve been there for us, and we’re there for them.”

While some bonus payments and travel allowances have not been met in the economic downturn following government lockdowns, basic salary and benefits such as housing and insurance have been, and will be, met for as long as is necessary, he said.

On rents in the malls, he said that these would be suspended as long as malls were closed.

“When people are not trading, we help them. But now that the malls are opening again, we will go back to charging rent,” he said, pointing out that MAF is both landlord and tenant in many of its properties.

While malls were closed, and even when access is being partially restricted under newly relaxed guidelines in Saudi Arabia, the UAE and Egypt, there has been a dramatic increase in e-commerce across all of MAF’s operations.

UAE online business has risen 300 percent over the past year, most of that in the last quarter, while Egypt is up 735 percent. MAF’s online business in Saudi Arabia is up a staggering 1,400 percent, year on year.

“We think this business will continue to be there,” Bejjani said, pointing to the Online Marketplace launched recently in the UAE.

Carrefour’s online business, notably from the gigantic store in the Mall of the Emirates, had some early problems fulfilling orders and delivering produce in the last mile, but Bejjani said these have been resolved by upgrading capabilities and more efficient use of technology.

In Saudi Arabia, new fulfillment centers have been opened, and delivery problems in curfew conditions ironed out.

“There was a surge in demand, and we had to adapt to it as fast as possible,” he said.

There has been little panic-buying along the lines of many stores in Europe and elsewhere, and MAF’s policy of holding a three-month stockpile in reserve is helping to keep supply lines open, even if a rise in airfreight costs risks causing higher prices at some stage.

“Governments are aware of that risk,” Bejjani said.

Malls in the Middle East are more than just shopping venues, however, and a good deal of social and recreational activity has been effectively put on hold by the pandemic, with cinemas, restaurants and other forms of entertainment — such as the big indoor ski runs in Dubai and Cairo — closed for the past month.

Inside Vox Cinema at Riyadh Front. (Supplied)

Restrictions on food and beverage outlets have been at least partly relaxed as the malls have reopened, with appropriate social distancing and protective wear requirements. But the cinemas remain closed, which is something Bejjani feels strongly about.

“I think cinemas are less risky than restaurants, for example, with lower levels of interaction between people. I don’t see why governments that are allowing malls, stores and restaurants don’t allow cinemas.

“I’d advocate reopening them, with the right measures like social distancing, protective wear and frequent sanitizing. Governments are doing a lot to support the economy, jobs and payrolls — why not just let people work where they can?” he asked.

MAF has led the way in the entertainment revolution in Saudi Arabia after cinemas were legalized two years ago, and Bejjani said that the group remained committed to the target of opening a total of 600 Vox screens in the Kingdom to eventually become its biggest movie operator.

“From a timetable point of view, that might be affected by the closures and project delays because of the pandemic,” he warned.

The crisis has affected the movie business in other ways too.

The big studios in Hollywood and elsewhere have put back the release of blockbuster films until the end of the year at the earliest.

Cinema-goers have become more accustomed during the lockdowns to television entertainment at home, streaming movies and series from the likes of Netflix and others.

Does Bejjani think that will be a permanent trend when the restrictions are lifted?

“The pandemic will accelerate trends, and expose strengths as well as weaknesses.

“There will be more streaming at home, I’m sure, so cinemas will have to be even more experience based.

Cinema-goers have become more accustomed during the lockdowns to television entertainment at home, streaming movies and series from the likes of Netflix and others. (Supplied)

“We’re already well advanced with our Dreamscape Immersive virtual reality venture, and we’re working on other things for later this year.

“We’re evolving our entertainment business into something that can accommodate customers wherever they are, at home or wherever,” he said.

Amid the global debate about when to fully open up economies and when businesses such as MAF will get back to some post-coronavirus normality, Bejjani takes a long-term and philosophical view.

“There will be a post-COVID-19 world, but it is still in the making. The response of governments will shape the behavior of consumers going forward. But it has to be based on science and medicine,” he said.

“I think the new post-pandemic world will be here when we have all had a vaccine shot and we all feel safe again.

“We will have an idea of how it will be for businesses like ours in six to nine months after we’ve had to vaccine. It could take two years or more from now to come back to a new normal.

“MAF is committed to sustainability, and a sustainable business must be able to withstand more than a month or two, or even a year, of crisis.

“The litmus test for us is if the business can go through a storm of bad weather and keep itself afloat.

“And this is more than just bad weather — this is a tsunami.”

INTERVIEW: Real estate exec Fabrice Susini confident Saudi Arabia’s coronavirus-hit mortgage demand will return

Updated 4 min 5 sec ago

INTERVIEW: Real estate exec Fabrice Susini confident Saudi Arabia’s coronavirus-hit mortgage demand will return

  • "There seems little prospect of a cascade of mortgage defaults as long as the current policy of government support continues," Saudi Real Estate Refinance Company CEO Fabrice Susini tells Arab News

What a difference a pandemic makes. At the turn of 2020, Fabrice Susini, CEO of Saudi Real Estate Refinance Company (SRC), could look back on two years of significant progress toward the provision of affordable home ownership for the Kingdom’s aspirational young population.

Increased property ownership was one of the main aims of the plan to diversify the Saudi economy away from oil dependency, setting a target of 70 percent home ownership by 2030.

It was all going to plan. New mortgage issuance had been “staggering,” Susini said, and SRC had reached its target of facilitating 60 percent home ownership with months to spare.

“It was a very positive story,” he said, allowing him to work on the next phase of Saudi Arabia’s move toward being a home-owning economy — buying more mortgage portfolios from banks and other mortgage originators, injecting more liquidity into the housing market via domestic and international sukuk issuance, and offering new long-term fixed-rate mortgages to potential and actual home owners.

The economic lockdown that took increasing effect from March has changed the figures on which those plans were based. New mortgage applications, which has been running between SR20 million ($5.3 million) to SR50 million per week, dropped into single-digit millions as potential buyers were forced to stay at home rather than go viewing properties and took stock of their spending plans in light of the economic downturn that followed the pandemic outbreak.

“We expect to report a sharp drop for April and May. I would be surprised if the numbers remain the same,” Susini said. “But the fundamentals remain the same. It is still an underserved market, compared with the demands and needs of the young, dynamic population aspiring to home ownership. The process may be slowed by a couple of months, but the demographic is still there. There will be a slowdown but I’m sure a catch-up is coming and the forward movement will resume.”

One reason for his optimism is the action taken by the financial authorities to support the economy in its hour of need, especially the stimulus packages unveiled by the Saudi Arabian Monetary Authority (SAMA) and the Finance Ministry.

“There has been a lot of support coming through for small to medium businesses and private companies, and that will balance and smooth out the process. I don’t see a big hit coming,” he said.

Effective monitoring and control of SAMA liquidity injections would ensure they reached the SME and private sector organizations they are mainly intended to help, he added.

“I’d be very surprised if any significant proportion was not properly channeled to the private sector and SMEs,” he said.


BORN: Rome, 1964


  • Law degree, Paris X Nanterre University, France
  • Banking and finance degree, Sciences Po, Paris
  • Master’s degree, finance, Dauphine University, Paris
  • MBA, London Business School


  • Relationship manager, Societe Generale
  • Analyst, Bayerische Landesbank
  • Global head of securitization, BNP
  • CEO, Saudi Real Estate Refinance Company

The mortgage industry in Saudi Arabia enjoys significant subsidies from the government for its products, and while some of these have been changed in recent week, reducing subsidies to mortgages for military and some civilian personnel, he does not see this as the beginning of a trend to remove subsidies for mortgages in the broader scope of SRC’s business.

“There is no danger to mortgage subsidies that I am aware of. The budget has been carried out, the resources are there. But of course we want to make sure that every riyal of subsidy is used to its most effective extent,” Susini said.

“When we saw the situation was becoming more challenging, the SAMA package was a great help by injecting liquidity into the financial system, but we also wanted to be more proactive ourselves in the relationship we have with our borrowers and our partners. We didn’t just want to wait until people were actually in difficulties before we acted,” he added.

The result was the “forbearance” plan for borrowers, by which SRC asked its mortgage partners to offer a three-month mortgage holiday to those who felt the need, and many took up the offer. “A big majority has gone for it. We see ourselves as a ‘citizen’ company and we do not just want to rely on the authorities. We asked ourselves what we can do in terms of citizenship and public policy initiatives,” Susini said.

There seems little prospect of a cascade of mortgage defaults as long as the current policy of government support continues, and SRC and mortgage originators persist with the policy of showing patience and understanding in difficult economic circumstances.

Nonetheless, prospective home owners are facing big challenges. Not only has the lockdown made the market mechanics of home-buying more difficult, with viewings almost impossible in the light of curfews and travel restrictions, but there is also the question of whether people will hesitate over such a life-changing decision. Will they want to buy a house or apartment while the pandemic continues to rage?

Susini thinks customers will learn to prioritize their financial decisions more carefully. “You might defer the purchase of a new car, but still want to buy a home. You would direct your choice toward those things you regard as more important. Home ownership is probably regarded as more essential,” he said.

The appetite of Saudi citizens for house purchase in the new circumstances will be better judged when SAMA and other financial bodies publish official figures in the near future, he said.

With regard to the overall health of the real estate market, Susini said that he has not seen a significant fall in property prices, but underlines the fact that SRC caters mainly for the affordable segment of the market, where big falls in value are less likely. He noted that apartments have been holding their value “quite well” in comparison with bigger units like townhouses and villas.

In an era when global interest rates are falling toward zero in many parts of the world, there could be an incentive for customers to go for the long-term fixed-rate deals SRC is offering.

“We’re seeing the need for more awareness of the benefits of fixed rates. Borrowers can grasp the benefit of remortgaging at rates that are significantly lower now than they were before. It is a choice for the borrower really. They can either own their home more quickly than before, or maintain their payments on more sensible terms. It can be beneficial for them whether rates are subsidized or not,” he said.

SRC reduced its lending rates for long-term fixed mortgages last month, is first cut this year following two rate reductions in 2019. Borrowers could now take advantage of a 5 percent rate on a 25-year mortgage, Susini said.

SRC is also working hard on the digital space, with online facilitators becoming more crucial to home purchase. The company is in the early stages of a study on fintech and digital mortgage origination, and some initiative could be forthcoming by the summer, he said.

“If you can talk of a silver lining from the current situation, it is that it is accelerating the digitization of financial processes. The payment processes are already quite well developed, but the sale of processes presents more of a challenge. The health ministry has organized some innovative processes around the digital market place, and the justice ministry has done good work on the digital origination of contracts.”

The strategy of including mortgage originators in the SRC set-up will continue, and Susini is holding talks with financial and corporate firms to bring more products under its portfolio. 

SRC is owned by the Public Investment Fund, the Kingdom’s $325 billion sovereign wealth fund, so it has access to finance at the highest level. But under Susini’s stewardship there has also been a willingness to raise money in local markets via domestic sukuk issues. Two have already been launched, and a third is lined up to take place in the summer.

After that, the company will be work on an international bond offering toward the end of the year, though he declined to say how much would be raised.

“We want to ensure we can continue to finance mortgages, to have sufficient tools and channels so that no bank or finance company is stopped from offering mortgages because of issues to do with capital ratios of liquidity,” Susini said.

He viewed recent downgrades by ratings agencies of banks’ creditworthiness or prospects as a “gray cloud” over liquidity.

“We want to be ready so that primary originators of mortgages have all the tools necessary to keep operating regardless of the problems they might face,” he added.