DUBAI - ON TARGET FOR 100 MILLION SQ.FT GLA
by Simon Thomson
June 2007

Retail International® has issued an interim update of its annual survey of Middle East organised floor space in retail real estate that suggests that by 2015 Dubai could have nearly 10 million square metres (over 100 million square feet) of Gross Leasable Area if all projects so far announced are completed.

This shows a significant uplift from this time last year when Retail International® were projecting a potential total of approximately 4 million square metres within the same time frame due to the number of recently announced new projects.

Commenting on this uplift, Simon Thomson, Principal of Retail International®, said “Obviously if all this space gets built it will represent more than a 100 per cent uplift. The dramatic growth in the population and economy of Dubai no doubt can be advanced as reasons to justify this extraordinary addition to the amount of retail space in Dubai”. He added, “it will be interesting, however, to see whether this increase in space will result in an equivalent increase in the number of new retail brands in Dubai. Failure to do so will result in yet more ‘clone malls’ and do little to add value to the Dubai retail experience”.

Thomson noted how other destinations such as Jordan, Tunisia and now Libya were witnessing significant ingoing investment in retail/leisure related projects and potentially could offer future competition to The Gulf for retail tourists from Europe given the Mediterranean climate, archaeological sights and cheap short haul flights.

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DOHA - A DOZING GIANT
by Simon Thomson
December 2005

While billion dollar projects in Dubai are announced in a blaze of publicity those costing tens of billions in Qatar tend to slip out almost unnoticed as dry economic statements.

Typically the Public Works Authority in Doha let it slip out that $7bn is to be spent over the next five years on infrastructure including 32 new roads. This came on top of the opening of the Qatar Financial Centre when $100 billion was reported as being earmarked for investment in the next five years. GDP, one of the world's highest, is growing at 10 per cent annually from the current base of around $33,000 per head.

With over ten percent of the world's proven natural gas reserves and third after only Russia and Iran, the oil and gas sector is likely to form the largest element, currently running at around 60%, of Qatar's economy, for many years to come. Consequently, barely a week seemingly goes by without details being released of another billion-dollar investment by both the national oil and gas companies or one of the international oil majors in the heavy end of the Qatar hydrocarbon industry.

And this exemplifies Qatar. A country with unparalleled latent wealth is developing quietly in to significant global economic importance in the shadow of its more brash neighbours.

The same applies to the shopping centre business in Doha. Since 2001, when it opened, Doha has been home of the City Centre Doha one of the largest shopping malls in the region. With an overall area reported to be over 300,000 sq.m and a letting space of 116,000 sq.m with some 270 units it is easy to see why. The mall is anchored by a Carrefour hypermarket plus other main anchors that include Debenhams, Landmark Group, Woolworth's and Grand Cine Center (14 screens). In anticipation of next year's Asian Games, the mall's critical mass is being substantially enlarged by the addition of five new high rise hotels that will anchor both ends of the shopping mall. Marriott, Rotana and Shangri La are reported to have been appointed to manage these properties that will add 1,200 rooms to the hotel stock.

Elsewhere in Doha, almost without fanfare, the Royal Plaza shopping centre opened its doors in October 2004. Situated on Al Sadd Street this is an upmarket fashion centre of around 29,000 sq.m anchored by Paris Gallery. It is the first mall in Doha targeting the upper end of the market, that historically has been served by the two long time Doha department stores Blue Salon and Salam Studio.

The 'new kid on the block' however, and being held with much anticipation, is the imaginatively named Le Villaggio. Forming part of the Khalifa Stadium sports complex, centrepiece of the Asian Games, Le Villaggio is expected to have a soft opening in autumn 2005. It is reported to comprise a total built area of 145,000 sq.m and once completed will be Qatar's largest shopping centre. It is understood Carrefour have been earmarked to operate a 20,000 sq.m hypermarket the retail anchor of the mall. A five star hotel also is mooted.

The name appears to be derived form the external appearance of the centre which it is said will reflect an Italian hill town.

Le Villaggio is situated adjacent to one of Doha's most successful district shopping centres, Hyatt Plaza. Reported to provide 40,000 sq.m with 25,000 sq.m letting space, this mall is anchored by Giant Stores, supported by the likes of Homes R Us, Jungle Zone family entertainment centre and the usual cross border fascias common place in such centres across the Gulf. It us understood the mall is to be enlarged no doubt to meet the threat of its upcoming neighbour.

Elsewhere and situated in the north west of the city is Landmark Shopping Mall that opened in 1999. Its castelated exterior belies a clean modern and light interior. It is anchored by Mega Mart Hypermarket and two department stores Marks & Spencer and BhS. As before it also has a full offer of international brands plus brands indigenous to the Gulf that includes The One, Damas, and The Home Collection

Looking into the future other, as well as yet to be identified, retail projects are destined to come to the market. These will include some 60,000 sq.m of high-end retail, which is destined for the $2.5 billion Pearl Island project currently being dredged just of the coast at West Bay. In September Kuwait's Al Shaya Group, Middle East franchisee for many key brands that include Debenhams, Mothercare, Top Shop and Starbucks signed up for 6,000 sq.m at the island's Porto Arabia fashion district.

In April, Dubai International Properties announced plans to develop Dubai Towers-Doha at a reported cost of some $250 million. The project, situated on a prime site on the West Bay corniche of Doha comprises some 200,000 sq.m and will feature offices, apartments, a five star hotel and high end shopping boulevard.

According Retail International®, the existing quota of shopping centre space in Doha of 250,000 sq.m is expected to increase to at least 510,000 sq.m by 2010. Even though this will double the footage ratio to about 8.5 sq. ft per head this will still be well below of that of Dubai and US levels, disregarding any population growth.

The message for those in the retail industry is that Doha is a city to watch, but don't expect the Qatari's to shout about it.

City Centre Shopping Mall, Doha

MEGA CHALLENGES LOOM

By Simon Thomson, Principal Retail International®

It’s better travelling than to arrive if the age-old adage is to be believed. For the past 25 years or so, mall development in the Gulf has been travelling and, in most cases, continues to do so in a forward direction.

Generalities however no longer apply to Dubai. Where once it travelled, in retail terms the destination will soon be reached. Having set out along the route to build the biggest, most expensive etc malls on the planet (the adjectives go on and on), these goals are being attained with the arrival in Dubai of a clutch of retail resorts. The term ‘mega mall’ seems hardly to do justice to the likes of Ibn Battuta, Mall of the Emirates, Dubai Festival City, Dubai Mall and City of Arabia. Ranging in size from upwards of 150,000 sq.m to over 550,000 sq.m and then some, the journey forward - if there is to be one - is about to get much tougher.

Once the task was to build a mall capable of extolling the most superlatives. Now that this is being achieved, the question must be as to what mall developers in Dubai can offer up to out-compete with themselves.

Throw enough resources to create a bigger example of an existing product may require financial muscle and technical experts, but having successfully done so, needs considerable creative skill and ingenuity to develop an even more successful follow up.

As in sport, commerce performs best when striving to win the world championship. Having won the size stakes the challenge for Dubai in the coming years is not only to retain that particular trophy – with the likes of China in hot pursuit – but as to how it ups its game in terms of overall retail offer to win the global challenge year on year.

By contrast to Dubai, the remainder of the Gulf and the region generally are still only in the evolutionary stage. The likes of Abu Dhabi, Doha, Manama and Kuwait all have projects or plans for projects that in some way will replicate what will have been completed in Dubai over the next few years – or sooner. Many with exotic features such as artificial islands combining retail with villa and hotel resorts. Mostly these appear to be targeted at the well heeled from within the Gulf or further afield.

In Saudi Arabia and the Levant the profile of most shopping malls still adheres to a basic pattern of meeting the regular needs of an ever expanding population with most malls anchored by a hypermarket.

French brand Carrefour, pioneered some years ago by its local partner MAF Investments (MAFI), has carved out a significant position for itself initially in the UAE and now ever more widely in the region. Battle is being joined in MAFI’s own back yard with the arrival of French rival Géant at Ibn Battuta Mall in spring 2005 and the keenly awaited opening of HyperPanda from the Saudi Savola Group at Dubai Festival City.

Each has announced plans for the rolling out of further stores across the region in the coming months and years. So too has another local brand, LuLu Hypermarket, part of the UAE’s Emke Group with some 40 to 50 outlets already across the region, but typically in freestanding locations.

Notwithstanding the dash for global status by Dubai, the rate of growth being witnessed in the retail sector generally would not have taken place without the basic demographic fundamentals being in place. The two cornerstones of which are people and money. The countries of this region have been experiencing a largely unreported population explosion in recent years – in certain cases a doubling within a generation.

Generally, the overall economic situation has been very positive, transforming into a volcanic eruption of cash in the past 18 months caused by the massive hike in the price of crude oil.

The combination of a young, growing and affluent population is the ingredient for which all retailers crave. Furthermore, this scenario is overlaid with a significant population of well paid expatriates and a growing number of tourists.

It is hardly surprising, therefore, that the opportunities the Middle East now offers to international retailers are now taken rather more seriously in their boardrooms than was the case ten years ago. Then it was a missionary venture to sell the opportunity, now it is a case of talking to the converted – almost.

From less than 50 or so international retail fascias represented in the GCC in 1990, there are now reckoned to be over 400 with more being added each year. Moreover, the master franchisees operating these brands in the Gulf are now extending their presence beyond the Gulf not only to the Levant but also to Turkey, Russia and India.

Dubai based developers such as Emaar Properties plan to invest $4 billion to develop 100 shopping malls in the Middle East, North Africa and Indian sub-continent, and Dubai International Properties are developing projects in Doha, Istanbul and elsewhere. Thus the considerable expertise and experience gained from Dubai is being made available to these less developed retail markets.

Abundance of spending power, however, with but few exceptions is considerably less than in the UAE. Where coffers in the oil rich Gulf have provided the certainty of a soft landing for any mistakes, the more populous but less wealthy emerging markets offer less room for ‘swerve’. Thus starkly underlining the desirability of doing the ground work of market research, and getting the correct market positioning and tenant mix right before - and not after - pouring the concrete.

Mall of The Emirates, Dubai

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