The GCC Countries

GCC Shopping Centres Growth in %

It will come as no surprise to any reader of the firm’s previous years’ surveys, and industry watchers generally, that the quantity of mall footage across the Middle East and the six GCC countries continues to grow inexorably.

The latest figures from Retail International® suggest that the amount of floor space actually completed across the GCC is just over 4.5 million square metres (48.4 million sq.ft.) in terms of Gross Leasable Area (‘GLA’).

A further 2.5 million square metres (26.9 million sq.ft.) GLA is under development with construction on going. By 2010 an additional 4 million square metres (43 million sq.ft.) could have been added to the total stock if all projects in the pipeline either announced or mooted are fully implemented.

This could bring the total up to a round 11 million square metres (118 million sq.ft.).

While this would represent an uplift over the next five years of some 150 percent across the GCC, the running is expected to be made by the UAE and Kuwait followed closely by Qatar. In real terms Saudi Arabia and the UAE will remain the clear leaders with projected totals reaching upto 4 million (43 million sq.ft) and 5 million square metres (53.8 million sq.ft) respectively.

Outside The Gulf

Outside The Gulf most current activity is concentrated in Amman, Beirut and Cairo where by 2010 space is forecast to reach 250,000 square metres (2.7 million sq.ft.) in the Jordanian capital and 600,000 square metres (6.5 million sq.ft.) apiece in the latter two cities. Subject to the political situation stabilising, it is feasible that additional development will be seen in the coming years in Iraq, Iran and Palestine. Developers and retailers are already making forays into these potentially lucrative markets as well as Syria, where several Gulf based companies have already established a foothold. Egypt, still beset by bureaucracy and restrictive controls on the import of certain goods, remains the largest undeveloped market in the region but with great long term potential. Turkey with a similar sized population and spurred on by the prospect of membership of the European Union is powering ahead with new shopping centres and is gaining ground as an outlet for certain Gulf based cross border retailers.

Equally, improving conditions in the North African countries of the southern Mediterranean rim such as Libya, Morocco, Algeria and Tunisia coupled with closer ties to the EU and the US will also prove attractive markets for Gulf retailers, developers and investors in view of their underlying wealth and significant indigenous populations.

Emerging Pattern

GCC Shopping Centres Growth 2005-2010

Returning to the Gulf, while Dubai will continue to dominate the headlines, especially during the coming 12 months as several mega malls come on stream, ‘a clearer pattern is at last beginning to emerge’ says Simon Thomson, Principal of Retail International®. Speaking from London just prior to the World Summit he said that although the retail density of Dubai remains at US levels of approximately 26 square feet (2.4 sq. metres) per head of population the rapid changes currently being witnessed in the Gulf rendered this figure less important than a few years back.


‘The fundamental demographic building blocks of economic wealth and population have both continued to grow across the GCC’ says Thomson ‘which when coupled with the improvements being made with inter-Gulf travel, the announcement of a causeway linking Bahrain and Qatar, plans for a pan Gulf high speed railway all point to greater homogeneity and integration of the retail market. Add this to the emergence of a UAE tri-city scenario of Abu Dhabi, Dubai and Sharjah with a combined population of three to four million the retail density suddenly drops to well under half US levels, which is far more sustainable’.

Nevertheless based on present forecasts Dubai is reckoned to provide around 30 per cent of all mall space in the GCC by the end of the current decade.

Another clear pattern that is emerging, according to Retail International®, is that just about all of the new shopping malls being developed are driven either by a hypermarket or major entertainment component – or both – as the key anchor. In some respects these large space users regularly offer around 20,000 square metres or more and unless clearly identified can lead to a distortion of the total GLA.

Greater transparency

This distortion, however, will continue so long as mall owners include these and non-retail activities in their overall shopping centre area. Greater conformity and transparency of reporting such data across the GCC would enhance the credibility of mall owners considerably say Retail International®. In the US such information is fully available and freely accessible through the ICSC. Now that the Gulf has achieved global recognition for the excellence of its shopping malls there should no longer be any need for developers to be coy at revealing accurate data about their malls if claims and epithets of magnitude are to avoid being tarnished as mere hyperbole.

‘Retailers and investors have significant financial interests in the development of new shopping malls that now routinely involve many millions of dollars. They need to be able to judge the performance of malls on a like for like basis’ says Thomson. ‘It is to be hoped that the next stage of evolutionary growth of the industry in the region will see a move towards the publication of mall data and performance statistics comparable to North America’.

© 2005 Copyright Retail International®

Note: For further details contact www.retailinternational.co.uk

Illustrations
Chart#1 – Percentage Growth in GCC Shopping Centres
Chart#2 – Real Growth in GCC Shopping Centres