CAIRO, Egypt — There was a time, long before the recent revolution but still within living memory, when this arresting and chaotic city was the most fashionable place in the Middle East. Glamorous Egyptian musicians dominated the Arab music scene while the country's film stars reigned supreme as style icons across the entire region. From far and wide flocked the great and the good to the Belle Epoque splendour of Cairo's trend-setting boutiques on Fouad Avenue, a decadent promenade designed in the sumptuous French style.

"Fashion and luxury retail boomed here in the 1940s," says Susan Sabet, the Egyptian founder of pan-Arab fashion magazine Pashion. "Until the nationalisation of private businesses, the famous Sednaoui department store founded by Elisa Sednaoui's ancestors even sold Christian Dior. And my own husband's grandfather was the importer of Bally at the time, for example."

"Cairo's couturiers and tailors, mainly of Greek and Italian origin, made the most beautiful gowns for local high society as well as for the affluent of the region. The Egyptian cotton trade was flourishing and supplying the world with the best quality available. Then, the decline began with the 1952 Egyptian Revolution."

Since then, Cairo has admittedly lost much of its lustre. But Egypt looms very large in a region where, for the greater part of 5000 years, it was either the dominant power or the ultimate prize. As the most populous Arab country and one of the Middle East's most diversified economies, its influence is still palpable all around the world.

Yet what makes Egypt alluring for most of the business bigwigs is not its enchanting past or even the debt we owe it as a cradle of human civilisation. It is the country's vast potential as a market of 90 million consumers of all income levels who, due to the political rollercoaster of the past five decades, remain largely underserved, underestimated or untapped altogether.

Revolutionary Times

Today, Egypt is emerging out of the shadows of yet another painful revolution, but, this time, it appears that the fortunes of the fashion industry might be on the rise rather than the decline. Local designers, manufacturers, retail moguls and other leaders seem remarkably optimistic considering that Egypt is still effectively on the brink of bankruptcy as it clambers to secure international loans. Not to mention the fact that so many of its social, religious and political problems remain both unresolved and highly combustible.

"You know why? The revolution showed the real people from the false. It was a filtering process that created, well, less contamination," says Ahmed Farid, a pioneering figure of Egyptian fashion and luxury. "The great thing now is that, for the most part, it was the clean money that survived the revolution. You see, before that, some local fashion brand partners made their deals through dubious relationships and money laundering. But now, nobody who's not really professional will be able to continue."

Farid began his career in the 1970s when he co-founded the Baraka Group to import sunglasses such as those made under Luxottica’s YSL and Armani licenses. At the time, optics were the only designer-branded category allowed under Egypt's protectionist regime. Restrictions on imported apparel and textiles were only lifted about a decade ago. But in the meantime, Farid expanded into accessories by becoming the Egyptian franchisee of Bvlgari through his subsidiary Bustan when the jewellery category was liberalised in the late 90s.

Another reason that Farid and some of his peers seem so optimistic at the moment is that there is faith – or at least hope – in the new government's ability to turn around the economy. Although it has only been a couple of months since former military general Abdel Fattah el-Sisi was elected president, Farid believes that two of Egypt's business blights, corruption and bureaucracy, will become more manageable under his tenure.

And he's not alone in his confidence in the new regime. Laila Neamatalla is an Egyptian designer who founded her business, Siwa Creations, 13 years ago in order to connect international labels like Ermanno Scervino with specialist seamstresses and embroiderers in the remote Siwa Oasis region of the Egyptian desert.

"President el-Sisi and his government are working very hard on overcoming the crisis and I believe we'll succeed soon. Business was very difficult for us during the revolution [and] we had to cancel export orders," she concedes. "But although the market has been hit hard, only a few businesses are actually closing down. Business is recovering for us now, thanks to the optimistic mood in the air."

Perhaps not surprisingly, the revolution has also compelled some local players to improve and streamline their operations. Azza Fahmy is an internationally renowned fine jeweller who was the first woman to enter the male bastion of Cairo's ancient Khan el-Khalili jewellery quarter as an apprentice in the 1960s. According to Fahmy, designers such as herself, Amina Khalil and Marie Bishara have become more flexible and nimble with their business operations and more agile with digital marketing.

"Not only that, a surge of new business entrepreneurs were born out of the revolution [although] it is too early to see any tangible ‘green shoots’ of economic recovery quite yet. The country needed stability and, with this, economic growth will definitely come. Egypt is a young fashion market with tremendous potential," Fahmy says.

Another thing the revolution highlighted was just how resilient certain sectors and tiers of the Egyptian market are to the kind of instability that would probably wreak havoc in other countries.

"We closed our Cairo and Alexandria stores at the beginning of the revolution but re-opened shortly after the revolution began based on demand from our clients," Fahmy reveals. "Surprisingly, we achieved reasonable retail sales at first and, even more surprisingly, the following months proved to be one of our best sales performing periods. I believe that this was partly due to the huge surge in support for local brands, coupled with the emotional need to maintain normality amid the unrest. Nonetheless, for us, the revolution was business as usual albeit operating within curfew hours."

In other words, because Egyptian business culture has had so much practice absorbing and enduring instability over the past half-century, many of its leaders have grown accustomed to finding ways around major obstacles and sometimes even turning them into assets. This is a quality that many international fashion investors will no doubt find reassuring.

The Lay of the Land

No matter how persuasive Egypt's business community may be in their portrayal of the market as a glass half-full, there is no getting around the fact that the current regime faces some exceptionally daunting challenges before it can claim real, lasting stability.

In addition to the need for urgent political reconciliation, there is the still smouldering social divide between Salafists and secularists as well as mistrust between the rich and the poor and several high-profile international human rights controversies. All this before there is any mention of the precarious state of the economy. Nevertheless, an increasing number of analysts are upbeat, indicating that the basket-case economy of last year is now at least on the long, hard road to recovery through reform and austerity, while investors point out that Egyptian stocks have returned to pre-revolution levels.

In other areas, too, the numbers look attractive. According to New World Wealth, a wealth intelligence provider, Egypt has the second highest number of millionaires in Africa. Today's 22,800 Egyptian millionaires represent a 2 percent increase from five years earlier – in spite of the revolution – and it is estimated that millionaires will increase by 52 percent in the next 15 years.

In terms of sheer size, the country can count between 20 and 30 million members of the 'middle class,' depending on which definition you apply. But no matter how you define it, Egypt’s middle class is growing, and growing fast. As for the side of Egypt's apparel and footwear market, Euromonitor International anticipate growth of 40.1 percent between this year and 2018 when the sector is expected to be worth $3.8 billion.

Egypt's ban on apparel imports was lifted just a few years before the 2011 revolution and the fashion market was growing at breakneck pace before the uprising in Tahrir Square. Large-scale retail developments in Egypt's major cities of Cairo, Alexandria, Port Said and Sharm El Sheikh were being planned to replace or upgrade some of the more traditional souks. At the same time, international high-street brands opened up in new or revamped shopping malls like Citystars, Mall of Arabia and Cairo Festival City.

"Even during the import ban, luxury brands had been sold discreetly at multi-brand boutiques 'behind closed doors'. But after import legalisation, we saw several new brands enter the market including standalone stores for Bvlgari, Zegna, Burberry and Ferragamo in The First Mall Cairo while others were sold at Beymen's department store in Garden City. Louis Vuitton was gearing up to open in 2012 but then, boom, the revolution happened so that was cut short," says Sabet.

"Still, Galleria 40 is the latest upmarket mall to open its doors, located in 6th of October City which is one of the suburbs of Cairo filled with luxury residential compounds. High-end indie retailers have also mushroomed in Cairo's affluent districts of Zamalek, Heliopolis, Maadi and in Mohandeseen on the other side of the Nile," she adds.

But according to Farid, herein lies one of the major hurdles the market needs to overcome before the next big wave of high-end brands expands in Cairo. "We're waiting for the birth of a unified fashion district and this is something that relies upon urban development activity from the government. I know that all the CEOs of Kering, LVMH, Richemont – everyone – they all have their eyes on Egypt. They're just waiting," he reveals. "It's so urgent in fact that I've written a white paper on it myself and handed it over to the new government."

Sabet has, in her own way, tried to address this issue too by creating and consolidating the city's first designer shopping festival called Cairo’s Fashion Nights, which she bravely launched right after the revolution and has organised annually since.

The Regional Dimension

Just as Egypt's macroeconomic development is now dependent on loans and investment from its wealthy neighbours in the Gulf, so too is Egypt's fashion market dependent on similar investment. Apart from a few native firms like Ahmed Farid's Baraka Group and Ossama El-Naggar'sNile Projects most of the Egyptian franchise rights for global brands were bought up by major players from the Gulf before Egypt's own market even opened up.

Retail operators like Alshaya from Kuwait, Alhokair from Saudi Arabia and MAC, a local subsidiary of the UAE's Chalhoub Group, still dominate the Egyptian high-street and contemporary sector alongside Lebanese firms like Azadea Group. The Qataris and the Saudis have long been tussling with locals over the acquisition of Egypt's once splendid 150-year-old heritage department store, Omar Effendi, which had grand outposts across the cities of the Middle East before it began to tarnish as a downmarket chain. Meanwhile, Gulf shopping mall developers like Dubai's Majid Al Futtaim are penetrating deeper into bricks and mortar with multi-billion dollar projects like the Mall of Egypt which is slated to open next year.

But putting strategic, geographic and profit incentives aside, there is one other compelling reason for fashion firms from the Gulf to push forward in Egypt now. To many Khaleeji Arabs, Cairo's style legacy is something that simply can't be quantified because it is partly about emotion. True, Kuwait may indeed be unrivalled for its fashion-forward street style; Beirut for its effortless vavavoom; and Dubai for being the glitziest shopping mecca of the Middle East. But for many fashion leaders, Cairo remains the spiritual and historical home of modern Arab style.

"Growing up in Bahrain in the 1980s, I could still feel the reverberations of Cairo's golden age even then, especially when I spent time with my grandparents. The music of Umm Kulthumand Abdel Halim Hafez was always in the background and we couldn't escape the expression 'Egypt: Mother of the World'," says Hind Matar, the London-based designer of the up-and-coming fashion brand MATAR. "I recall with great fondness watching so many spectacular old films from that era with my father like Cairo Station and The Nightingale Prayer. And I specifically remember how modern and elegant the Egyptian actresses were."

During much of the 20th century, Egypt was a regional leader in art, culture and education around the Arab world. Kings, presidents, sultans, ministers, prominent businessmen and royals from most Arab countries were educated and entertained in Egypt, leaving an indelible impression on generations to come.

Dana Al-Khalifa is a blue-blooded Bahraini entrepreneur who has used the popularity of her fashion blog TheOverdressed.com to partner with jewellery trade shows and global e-commerce sites interested in expanding in the Middle East. According to Al-Khalifa, it is not simply about nostalgia for Egyptian style icons of yesteryear like Faten Hamama, Soad Hosny and Hind Rostom, but also the timeless elegance that Egyptian style still conjures from that era today.

"There’s a black and white picture of my grandmother in a striped sleeveless taffeta dress cut in the classic 50s silhouette and, although she never told me, I get the feeling she got it in Egypt – because at that time Egypt is where all those beautiful clothes came from," she says. "There are underlying elements of those [classic Egyptian] characteristics in the way many women dress today. In fact, it's what I draw inspiration from too."