More to malls than shopping



With more than 100 malls operating in the UAE, the retail business is booming. But following this week’s Middle East Council of Shopping Centres (MECSC) event, there will soon be more competition among stores to entice customers to part with their money.


Data compiled by the International Council of Shopping Centres (ICSC) revealed tourists in Dubai are set to reach 15 million by 2010, which in turn equates to between 40 and 50 per cent of prospective shoppers. It also revealed the retail sector will account for 50 per cent of Dubai’s gross domestic product (GDP) by next year as overall retail spending is predicted to reach Dh37 million.


Yet despite this the UAE is not the biggest retail growth market. That accolade goes to China, which last year saw the sector rise by 17 per cent – a 70 per cent increase from 2006. It also boasts the biggest shopping facility in the world in the form of the South China Mall, an incredible indoor and outdoor centre spread over 100 acres.


From Dubai Mall being built in the Downtown district to Arena Mall in Dubai Sports City (DSC) and Mall of Arabia in Dubailand, new shopping centres are springing up to cope with the influx of tourists and new residents arriving here on a daily basis.

The ICSC expects the city’s population to grow from the current 1.4 million people to 3.5 million by 2010, but even with numerous projects in the pipeline, its President and Chief Executive, Michael Kercheval says Dubai’s retail sector is struggling to keep up with the growing demand.


“A certain amount of retail buildings will be supported by tourists, who will spend more than the local population. A lot of the world looks at Dubai for combining entertainment, tourism and shopping in a very powerful and dynamic way. Development encourages tourism and tourism development,” he says.


Stan Eichelbaum, the founder and President of Marketing Developments Inc and Planning Developments Inc, believes the Middle East is a “key market to watch”, but warns that planned mega malls – whether here or overseas – have to be careful.

“Maturity is coming quickly in well-conceived projects in the Middle East, but everyone has to define mega malls. China has a $600 billion (Dh2.2 trillion) market, but putting 2,000 retailers together doesn’t always work,” he says.


Equity capital is also making its way into the retail world with industry heavyweights such as Goldman Sachs showing an interest in Toys R Us when it was being taken over in 2005.

However, a consortium of three groups  later bought out the struggling toy firm and this, says Eichelbaum, proves how lucrative the retail industry can be. “They are moving into retail at a rapid pace and it appears to have great opportunities,” says Eichelbaum.


But while the UAE is growing, other countries cannot say the same. In the United States there are more shopping malls being knocked down than are being built, which means many are having to diversify in order to attract shoppers who are becoming disillusioned with the traditional mall concept.

Hybrid malls in the US, which combine enclosed and open-air retail space, are now a popular new development and in the United Kingdom out-of-town retail parks, which cater  towards department and home furnishing stores rather than smaller clothes and electronics shops, are increasingly popular.


But the intense summer heat in the UAE makes this concept somewhat impractical and as a result it is forcing a new trend to emerge in the lifestyle field. Visiting a mall is more than just a necessity to do the weekly food shop; they are a key aspect of residents’ lives and the reason others will be following the lead of Mall of the Emirates.


The facility in Al Barsha is Dubai’s first destination mall as it houses the Kempinski Hotel. Tourists can stay, eat, sleep, socialise and even ski all under one roof, making it the perfect place for a family holiday. Now developers are realising the potential of having more than just shops in one area to attract a wider range of customers and there are plans to extend this existing model.


Developers are now creating “one-stop shops” – a place where people can buy the latest trends during the day, then go to the cinema, a restaurant and be entertained in the evening. Arena Mall will even have direct access to Dubai Sports City’s 10,000-seat indoor stadium, negating the need to even see the outside world as visitors move from one building to the next.


“Mall of the Emirates has been a revelation to the industry over just a few years and now consumers have come to expect a wider variety of outlets,” says Kercheval.


But whatever happens around the world, it is clear the ICSC believes Dubai is a market leader and as such is changing the face of malls from Chile to China thanks to forward-thinking developers who continue to push the boundaries of what a complete lifestyle experience should encompass.
René Tremblay, ICSC Worldwide Chairman, says: “The West can learn from the Middle East. Fifteen years ago, developers went to North America to see the latest trends, now they look to the Middle East. A lot of people come here and learn about the industry.”



Nakheel bucks the tourism trend


While tourism is having a major impact on most malls across Dubai, master developer Nakheel is bucking the trend by only building malls to serve its communities. Five mega malls have been announced just in Dubai, which will cost billions of dollars.


Graham Dreverman, Group Managing Director of Nakheel Retail, says while tourism accounts for 25 per cent of sales, that is an optimistic figure and it is residents who will make the greatest impact.


“Nakheel is building communities for three million people who all need facilities. We’ve not announced anything on the Waterfront yet, but it will have 1.7 million people living there, which is more than the population of Dubai today, so it will have at least two mega malls,” he says.


They also have projects on Palm Jumeirah and Palm Deira as well as Great Mall Dubai by International City and phase II of Ibn Battuta Mall, all of which will have captive markets.


But even with the scale of development, Dreverman thinks there is still room for more. “I don’t think Dubai will reach saturation point. It’s maybe 10 years away, but greater Dubai will be a metropolis.”