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RETAIL INTERNATIONAL The Annual Report 2011-2012 on the shopping centre market in the MENA Region.

RETAIL INTERNATIONAL The Annual Report 2011-2012 on the shopping centre market in the MENA Region.

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  • 1. RETAILINTERNATIONAL® Founded 1993. The original independent MENA retail consultants.THE ANNUAL REPORT 2011 Volume 19 Edition 1 2011 Tel: +44 (0) 1580 860870 info@retailintern ational.co.uk Source: Yahoo Images The Annual Report 2011 Covering the GCC countries, The Levant and North Africa the report is based on the same extensive research as previous years of over 300 shopping centres across MENA. www.retailinternational.co.uk 1 Copyright © 2011 Retail International®. All Rights Reserved. No reproduction without prior permission.
  • 2. RETAILINTERNATIONAL® Founded 1993. The original independent MENA retail consultants.The Annual Report 2011 Tel: +44 (0) 1580 860870 info@retailinter national.co.uk Overview at Q3 The Arab Spring Volume 19 Edition 1 2011 If there was any likelihood of “the build it and they will come” syndrome reappearing with improving economic conditions following the 2007/2008 sub-prime crisis, this was truly laid to rest on 3rd March 2011.This was the day when a 26 year old street vendor from the small Tunisian town of Monastir set himself ablaze in protest at the bureaucratic hindrance in his work. Few then could have predicted, like the blaze itself, that this single act would be the spark of a revolution that in weeks would have engulfed much of North Africa, parts of the Levant and the Arabian Gulf. Even fewer would venture to assess the outcome in 2012 of what has now become known as “The Arab Spring”, while so much “unfinished business” remains in the likes of Yemen, Libya, Egypt and their neighbours. The Euro Factor Set against the OECD reporting economic recovery coming close to a halt in the major industrialized economies, with falling household and business confidence affecting both world trade and employment, Greece “bankrupt” and the Euro Zone in turmoil not to mention uncertainty as to the outcome of the US Presidential Elections in 2012, the international political and financial climates are now major issues to be confronted by any prospective mall developer in the MENA region. Where once demographics coupled with demand and supply were the major considerations for those who bothered with such matters, the prospect of gathering international storm clouds can not now be shrugged off quite so lightly on the basis of build it and they will come where the ‘they’ are tourists and other punters from the west. Consumer Confidence at Record High Despite the ravages of recession, uprisings and war there are signs of better times to come. In August consumer confidence in the UAE was reported to be at a record high. In its survey of 25 markets, the MasterCard Worldwide Index of Consumer Confidence posted the country’s strongest showing ever in the retail, travel and hospitality sectors. Respondents to the survey across the Middle East were said to be equally bullish about the health of business sectors within their markets. www.retailinternational.co.uk 2 Copyright © 2011 Retail International®. All Rights Reserved. No reproduction without prior permission.
  • 3. GCCRETAIL INTERNATIONAL® THE ANNUAL REPORT 2011 Qatar & UAE Qatar Doha 825,000 Qatar, thrust to being a major economic power in a matter of years with seemingly bottomless pockets sq.m is ploughing on with a development programme geared to staging the 2022 FIFA World Cup and bid to completed host the 2020 Olympic Games. Apart from the stadiums themselves and major infrastructure, shopping is set to be a major component, expanding existing supply of mall GLA to some 1,457,000 sq.m by 2020. Vying for mall supremacy in Qatar is Doha Festival City a mega project costing some $1.37bn due for completion in 2014. Other runners are likely to be the retail component of Msheireb Properties $5.5bn transformation of 31 hectares in the centre of Doha, Lusail City, Ezdan Mall in Al Gharafa, and Al Meera Holding’s plans to build two new malls in Doha. In November Barwa revealed it had signed with retail giant Chinese Dragon Mart at Barwa Avenue to open in Q1 2012. This will be the second such facility in the Gulf following the first in Dubai. AbuDhabi 870,000 Abu Dhabi sq.m completed In Abu Dhabi, Aldar Properties, following a reported $5.2bn bailout from the government in January 2011 and a return to profit after the sale of assets, announced in October the signing of the main construction contract for Yas Mall a 235,000 sq.m mega mall due for completion in 2013. This and other projects such as the 2010 completed 147,000 sq.m GLA Dalma Mall in Mussafah, Mushrif Mall 56,000 sq.m by year end 2011, and others in the pipeline, will bring the projected supply of GLA to some 2 to 2.5 million sq.m by 2015. Dubai Dubai Meanwhile, as if heeding calls from leading retailers that it cannot sustain any more mega-malls, 2.9m sq.m development in Dubai has slowed markedly with new activity concentrated on community malls and completed mall upgrades. Notably the latter includes a $55.4million expansion of Al Ghurair City, one of Dubai’s oldest shopping malls with the addition 150 new outlets bolstering its size by more than 12,000 sq.m. Likewise BurJuman announced plans to remodel the mall to enhance facilities and increase footage by some 20,000 sq.m over 18-24 months. Total mall GLA stock is likely to touch 3 million sq.m within the next few years. The upward swing in footage is only likely to recommence with the opening of Phoenix Mart mall a massive new project covering some 800,000 sq.m next to the existing Dragon Mart on the outskirts of the city. Said to be three times the size of its neighbour, the Phoenix Mart will comprise 6,000 outlets and like Dragon Mart these will house brands mostly from China. The $550 million project investment will come from the Chinese government (70%) and the balance from China Longines. Not to be outdone, Nakheel owners of Dragon Mart announced plans to extend their mall by 170,000 sq.m and 5,000 additional parking spaces. Other than this “niche” activity many conventional projects remain stalled or even abandoned. The Ilyas and Mustafa Galadari group however still have plans for the much heralded and delayed Mall of Arabia mega-mall although the group is reported as saying the mall will now not open before the end of 2015. The 1st phase was due to comprise some 560,000 sq.m. Fujairah 56,000 Fujairah sq.m in the pipeline Elsewhere in the UAE Majid Al Futtaim Properties are on course to open Fujairah City Centre in early 2012. With a GLA of 34,000 sq.m the $110 million project is being built in partnership with the Fujairah Investment Establishment. The retail stock in this small emirate is due to be enlarged further with the development of the Fujairah Business Centre, which will add some 22,000 sq.m of retail by 2013-14. www.retailinternational.co.uk 3 Copyright © 2011 Retail International®. All Rights Reserved. No reproduction without prior permission.
  • 4. GCC & IranRETAIL INTERNATIONAL® THE ANNUAL REPORT 2011 Bahrain, Oman, Kuwait, KSA & Iran Bahrain Bahrain 720,000 In Bahrain, Ramli Mall opened at the beginning of the year. Developed by EMKE and anchored by a sq.m LuLu hypermarket this centre brings an additional 80,000 sq.m supply to the Bahrain stock. In late completed August in the wake of political unrest resumption of the Capital Trade Centre (first published in 2008) was announced. The 140,000 sq.m mixed-use development is designed to house the Manama Central Market and other retail outlets. With completion expected “within six years” the resurrection by the authorities of this project may have more to do with re-building Bahrain’s shattered international image than a need to meet retail demand in an already well supplied market likely to approach 900,000 sq.m GLA within two years. Oman Oman 346,000 sq.m Oman’s supply will be significantly increased over the coming months by several new projects completed including the 60,000sq.m Grand Mall and the 6,500 sq.m Royal Opera House Mall. Combined these will bring total projected supply to some 435,000 sq.m. Kuwait Kuwait In Kuwait, a $500m extension to the nation’s largest mall, The Avenues, is set to open in 2012 bringing 630,000 the enlarged centre to an estimated 250,000 sq.m to include a Harvey Nichols’ department store of sq.m 10,000 sq.m. There are ambitious plans to bring The Avenues GLA up to some 400,000 sq.m through completed the addition of further phases going forward according to Mabanee Company, the developer. Saudi Arabia Buoyed by retail sales expected to grow from just under $27bn this year to more than $37bn in 2015 on the back of strong economic growth, mall development in Saudi Arabia continues in-line with KSA domestic needs, but with a number of large projects still on the back burner. Across the three major 4.4m sq.m cities and conurbations plus the Holy Cities the total projected space stalled could amount to over completed 600,000 sq.m which, if resumed, could bring the total GLA for these centres within the next 3-5 years to some 6.5 million sq.m Bucking the trend, however, Dar Al Arkan Real Estate Development Co., Saudi Arabia’s largest developer by market value, is nearing completion with Al Qasr Mall in south Riyadh. Offering over 90,000 sq.m GLA plus a 10,000 sq.m ice-skating rink, the centre is possibly the largest coming to fruition in 2011/2012 in The Kingdom. Iran Shiraz Across The Gulf, in Iran, UAE-based conglomerate Royal Star announced completion in June of its 2,500 units flagship $830 million mall ‘Fars Shopping Complex’ in Shiraz. The mall, claimed to be the largest in the planned world in terms of the number of shops in a single complex, by offering 2,500 retail premises may be more ‘souk’ than conventional mall but nevertheless is anchored by a 14,000 sq.m Carrefour hypermarket and in 2012 by a five star hotel, the “Burj Fars”. www.retailinternational.co.uk 4 Copyright © 2011 Retail International®. All Rights Reserved. No reproduction without prior permission.
  • 5. RETAIL INTERNATIONAL® THE ANNUAL REPORT 2011 North Africa Egypt Beyond The Gulf, in North Africa and the Levant, 2011 commenced on an upward swing with developers planning, commencing or constructing new malls and extensions from Lebanon to Libya and most nations in between and beyond. In the wake of the civil unrest in the Spring, several centres in Tunis and Cairo suffered damage and even torched. Cairo 620,000 Egypt sq.m completed In Egypt, and Cairo in particular, the market at the start of 2011, looked to be especially active. Mall of Arabia a super regional mall of some 180,000sq.m located in Sixth October City opened its doors to the 1st phase. Nearby the high end Designopolis was already trading and a second phase imminent. Still in the west of the city MAF Shopping Centres were reported to be finalizing plans for the Mall of Egypt, a 160,000 sq.m ‘clone’ of the Mall of the Emirates, Dubai scheduled to open in 2014. Dandy Mega Mall one of the first malls in Cairo, had completed enlargement to 90,000 sq.m and signed up Marks & Spencer in the process. In all West Cairo was on target to achieve the 1-million sq.m mark of GLA by 2020. This situation was being mirrored in East Cairo with a similar potential GLA over ten years. Al Futtaim Group’s Cairo Festival City in New Cairo leads the pack. A 160,000 sq.m mega mall along the lines of its sibling, Dubai Festival City. Anchored by their own in-house brands such as IKEA and Marks & Spencer, Al Futtaim surprised the market by signing up Carrefour as the hypermarket anchor from its family rival Majid Al Futtaim. The latter’s Maadi City Centre suffered severe damage in the unrest and remained closed for two months after a reported $34million of damage. Following the uprising and change of government, a number of developers – especially from outside Egypt – are taking stock of the situation or have even cancelled projects. Thus some rowing back from the potential 2 million sq.m. GLA for Greater Cairo by 2020 will be required, unless restarts or substitutions are made to redress the balance. In June Majid Al Futtaim Holding was reported as ‘vowing to push on with its Egypt expansion’ in the wake of talks with the new government, only to reveal in September it had slowed the pace of investment in Egypt. www.retailinternational.co.uk 5 Copyright © 2011 Retail International®. All Rights Reserved. No reproduction without prior permission.
  • 6. LEVANTRETAIL INTERNATIONAL® THE ANNUAL REPORT 2011 Syria, Lebanon, Jordan Syria Damascus A number of countries have of course been free from revolution although there is significant unrest in 100,000 Syria. Considered by many to offer long term potential a number of major mixed use and shopping sq.m centre schemes have been slated for Damascus and Aleppo. Setting the pace Majid Al Futtaim completed Holding which, despite the political turmoil, in August announced it had begun work on its $1bn mixed-use development located at Sabboura, 17km west of Damascus. The project will include the largest shopping mall in the Levant, Khams Shamat Mall with more than 200,000 sq.m GLA. Come September the media reported that development activity had been curtailed in the country this year. Others are sure to follow what MAF does over the coming months. Supply therefore in the two main cities seems likely to remain static at around 100,000 sq.m for the coming year. Beirut 530,000 by Lebanon sq.m 2013 Lebanon mostly free from unrest is beginning to suffer due to the severe lack of tourists due to the on- going situation in Syria. In Beirut, the arrival in 2012 of MAF’s Beirut City Centre is awaited with a mix of considerable anticipation tinged with uncertainty. Located in Hazmieh the mall will offer a GLA of 60,000 sq.m. This will bring the total supply in Greater Beirut to some 530,000 sq.m GLA. The MAF shopping mall links in with Waterfront City the flagship project to line the Joseph Khoury Marina launched in July 2011. Amman 310,000 Jordan sq.m by 2013 Jordan, too, has remained relatively trouble free. Taj Mall the latest addition to Amman’s retail stock with some 50,000 sq.m GLA and scheduled for opening in 2011 will bring the current and pipeline stock up to some 310,000 sq.m by y/e 2012. www.retailinternational.co.uk 6 Copyright © 2011 Retail International®. All Rights Reserved. No reproduction without prior permission.
  • 7. MAGHREBRETAIL INTERNATIONAL® THE ANNUAL REPORT 2011 Libya, Tunisia & Morocco Libya Projects in Libya were hastily abandoned as some 700,000 expatriates fled the country and NATO bombing began. Tripoli 95,000 Prior to the war, Turkish developer Turkmall had started construction in March 2010 of Forum OYIA in Tripoli and sq.m scheduled to open at the end of 2011. This was set to be suspended Libyas first shopping and lifestyle centre with 95,000 sq.m GLA. Notwithstanding and six months on the scenario likely to emerge during the coming year is likely to be one of cautious optimism. Once the country is again peaceful, Libya offers the greatest potential with its latent wealth and shortage of up to date shopping centres. Tunis 140,000 Tunisia sq.m completed In Tunisia, centres destroyed or severely damaged in the uprising will need replacing. Tunis City, owned by Groupe Mabrouk, with 55,000 sq.m GLA, anchored by Géant hypermarket, and the leading mall in the country, was looted and set ablaze. Six months on the centre has partially re-opened but only a third of the stores are up and running. With a new regime, greater market transparency may emerge thus attracting foreign investors and cross border brands back to the country, where once so many mega projects were planned by Gulf developers. Souce: Life in Tunis Casablanca 120,000 Morocco sq.m in the pipeline Morocco, also has remained stable but with little real major mall development activity. The opening of Morocco Mall under development in Casablanca with some 70,000 sq.m GLA and to be anchored by Galleries Lafayette was due to open in early 2011 but now appears to have been rescheduled. The government is supportive of large-scale retail and in February Mr. Bricolage the French DIY chain opened a 2,800 sq.m outlet in Tangier, its third in the country. As further evidence of this Sonae Sierra the major mall developer from Portugal, possibly due to the worsening home economy, announced in May that it was moving into Morocco. The Company’s first deal was signed with ONA Group and CDG group for services related to the development of a GLA 40,700 sq.m mall forming part of the Casablanca marina due to open at the end of 2013. The introduction to Morocco of a company of Sonae Sierra’s impressive track record might be a wake up call for others in this emerging market and, potentially elsewhere in the Maghreb - once normality is restored. www.retailinternational.co.uk 7 Copyright © 2011 Retail International®. All Rights Reserved. No reproduction without prior permission.
  • 8. RETAIL INTERNATIONAL® THE ANNUAL REPORT 2011 Summary GCC GCC Completed 11.4 m sq.m In the pipeline 2.9 m sq.m Since establishment in 1993 Retail International® has completed Wherever you may thinking of next, either as assignments developer or retailer Retail International® is ready involving over 2,500,000 square m. to assist’ ....Simon Thomson GLA RETAIL INTERNATIONAL® www.retailinternational.co.uk e: info@retailinternational.co.uk : +44 1580 860 870 Retail International® is an independent retail consultancy owned by Simon Thomson offering specialist professional services to the retail industry. It was established in 1993. Simon Thomson is an International Retail Consultant. Qualifying as a Fellow of the Royal Institution of Chartered Surveyors, London, he was invited to become a member of The Counselors of Real Estate, Chicago, in recognition of his international work on shopping centres. He is an active member of the International Council of Shopping Centers based in New York and was a founding director of The Middle East Council of Shopping Centres, Dubai, of which he continues to belong. Simon Thomson enjoys a distinguished career spanning more than 30 years in the international shopping centre and retail business having been and continuing to be involved with the development of leading shopping centres and the establishment of cross border retailers in Central Europe, the Middle East, Australia, USA, Western Europe. Note: The views expressed in this document are those of Retail International® and no liability can be accepted for any errors of fact or opinion. Copyright © 2011 Retail International® All Rights Reserved. No reproduction without prior consent.