Aldar starts work on mall for Al Ruwais

by Vivian Salama

The National

 

DUBAI // The developer Aldar has begun work on the first major shopping centre to be built in the remote industrial town of Al Ruwais. 

The new mall, located 220 kilometres west of Abu Dhabi near the Saudi Arabian border, will serve as a community centre, providing a range of activities for residents who now have to drive long distances for shopping and leisure facilities. 

“People in Al Ruwais have to jump in a car, pack the family up, take a picnic and go on a long drive just to shop – it’s a day’s journey,” said Fred Douglas, the leasing director for Aldar. “Why should these people be denied a fully enclosed, air-conditioned shopping mall – the things that people in Abu Dhabi and Dubai have and take for granted every day?”

The 30,000-square-metre centre will feature a still-unnamed hypermarket, a wide range of retail shops and a Warner Brothers cinema. Aldar is currently reclaiming land at the site and is expected to start the leasing phase within weeks. 

Aldar officials expect the population of Al Ruwais to grow from 16,000 to 20,000 by the mall’s scheduled completion date of 2010. 

By factoring in communities around Al Ruwais, they believe the new shopping centre will serve as many as 40,000 people, many of them expatriates working in the oil industry.

According to Phillip Vaughan, the director of retail development for Aldar, the company is the UAE’s only real estate developer actively pursuing projects in outlying areas of Abu Dhabi. 

Aldar has no plans to expand to the other emirates, but it does plan to open shopping centres in other towns.

“There is potential for further facilities and amenities in due course, but if you consider the point of oversupply, Al Ruwais really only needs one strategic retail offer, and that’s what’s being supplied,” Mr Vaughan said.

Aldar already has a number of schemes under construction in Abu Dhabi city, including the five-hectare Central Market and the Dh1.2 billion (US$327 million) Noor Al Ain development, which will complement the existing Al Jimi Mall. 

Both are scheduled for completion in 2010.

Five new malls on the way in Dubai

 

by Vivian Salama

The National

Courtesy of Nakheel

 

DUBAI // Nakheel, the Dubai-based developer, will begin construction of five major new malls in the emirate before the end of this year. 

The malls would contribute an additional 1.3 million square metres of retail space to the city’s landscape, said Graham Dreverman, the group managing director of Nakheel Retail. 

“In Dubai alone, Nakheel is building communities for over three million people over the next 20 years, so we need to supply somewhere between five and six million square metres of retail floor space,” said Mr Dreverman. “There is an undersupply of retail space in Dubai today.”

Scheduled for completion in 2012, the malls include shopping centres on Palm Jumeirah and Palm Deira, the 140,000 square metre second phase of Ibn Battuta Mall, and India Mart and Great Mall, both in Nakheel’s International City.

Palm Deira Mall will be the largest in Dubai when it opens, superseding Emaar’s 520,000 square metre Dubai Mall and I&M Galadari’s 930,000 square metre Mall of Arabia.

“Big is great if it makes sense,” said David Thurling, the managing director of Nakheel Shopping Malls. “If we’re building the malls at 400 or 450 million square feet, we’re doing so because it meets the demand.”

Tourist spending is a major contributor to the success of most of Dubai’s shopping malls, and Nakheel will build 21,000 hotel rooms alongside the retail centres. The malls will also target the large, mostly Asian, expatriate community.

“There’s India Mart, which will service the community here, which is predominantly South Asian.”

Nakheel currently operates two retail centres in Dubai: Ibn Battuta Mall and Dragon Mart, the largest Chinese wholesale trade centre outside of China.

While Ibn Battuta Mall has a Géant hypermarket, Nakheel has signed a memorandum of understanding with an as yet unnamed major supermarket group to lease space in all of its new malls.

The combined new projects would be worth “billions of dollars”, said Mr Dreverman, adding a firm figure would be available once construction contracts had been finalised.

“In the next six months, we’ll be on the ground and within the next 12 months, we’ll actually have started on the sites of all of these,” he said.

Eventually, Nakheel intends to create one-stop retail and entertainment destinations at its new malls. 

The Palm Jumeirah mall will include a 1,800-seat Cirque Du Soleil theatre, which Mr Dreverman likened to Las Vegas. It will also house the largest group of restaurants under one roof in Dubai. 

Great Mall, in International City, is planned to accommodate the largest collection of home furnishing retailers in the world.

“This we see as essential, given the housing boom here,” said Mr Thurling.

Nakheel will unveil more details at the annual convention of the Middle East Council of Shopping Centres, which starts today in Dubai.

vsalama@thenational.ae

 

Carrefour to cap basic food prices

by Vivian Salama

The National

Carrefour, a subsidiary of Majid Al Futtaim (MAF) Hypermarkets, is the latest UAE retailer to cap food prices in response to growing inflation fears. 

Officials with the region’s largest retailer are due to sign a memorandum of understanding (MoU) this morning with the Emirates Society for Consumer Protection, a division of the Economy Ministry, to maintain 2007 prices on various basic commodities.

A similar agreement was signed last month between the Government and the Union Cooperative Society, placing ceilings on more than 16 staple items, including cooking oil, flour, sugar and eggs, in an effort to ease the burden of skyrocketing food prices.

The country’s largest domestic retailer also announced that it would import goods directly from source, whenever possible, bypassing intermediaries when stocking its shelves and thus eliminating another layer of cost.

Lulu, the supermarket chain operated by Emke Group, signed a memorandum of understanding with the Economy Ministry earlier this month, agreeing to price caps on 32 products.

“These agreements are basically a goodwill gesture between our supermarkets and the Government of the UAE,” said V Nandakumar, a spokesman for Lulu, who said that the motivation for capping prices was very different from competitive price-cutting. “We are trying to play a part in curbing the inflation of prices, which is really hurting the people.”

Last week, officials with the Economy Ministry announced that 15 items — including dry and condensed milk, frozen and canned vegetables, baby food, chicken, edible oil, rice, flour, fish, meat and tea — were to be placed on a free import list. The Government is also conducting a study on the benefits of stockpiling at least 15 essential food items.

Time will tell whether smaller, domestically-based supermarkets will follow the lead of Carrefour, Union Cooperative and Lulu.

“It’s very difficult for me to say we’ll do the same because [the big groups] purchase tons of containers of rice and other products directly from the countries of origin,” said David Berrick, general manager of retail at Abela Supermarkets. “We buy from the local market so we are governed by [importers’] prices.”

Abu Dhabi’s Department for Planning and Economy reported a 10.7 per cent jump in inflation last year, driven by higher rents, transport and food costs. Food, beverage and tobacco accounted for 11 per cent of that rise. Food retail in the UAE was worth an estimated Dh12.8 billion (US$3.5 billion) in sales last year.

Soaring food and fuel prices have been at the heart of recent riots in countries including Egypt, Indonesia, Cameroon and Peru, with the head of the International Monetary Fund recently warning that the surge in food prices could push 100 million people into deeper poverty.

However, some industry analysts warn that price caps may exacerbate this growing crisis, as farmers turn to more profitable commodities, such as biofuel crops.

“When you create a price ceiling, you will have shortages at some point,” said Andy Barnett, a professor of economics at the American University of Sharjah. “These devices will only make the impact of inflation worse, not better.”

UAE retailers remain optimistic

By Vivian Salama

The National

ABU DHABI // UAE retailers are optimistic that they will weather the global financial storm, despite a warning last week by Ben Bernanke, the US Federal Reserve Chairman, that the US economy was heading for a recession. Retail sales are stalling in countries across the West as cash-strapped consumers stay away from shops.

The loss of consumer confidence is exacerbated by high consumer debt levels. A new report released by the European Union revealed that European retail sales dropped 0.5 per cent in February, causing a setback to the gains made over the Christmas-New Year holiday period. The EU’s largest economy, Germany, reported a 1.6 per cent decline.

Conversely, retail growth in the Middle East shows no signs of abating. According to regional industry forecasts, the retail industry across the Middle East is projected to exceed Dh1.84 trillion (US$500 billion) by 2010. 

In Dubai and Saudi Arabia, the sector is currently valued at Dh27.89bn and Dh22bn, respectively. The same is true in other emerging markets. In China, for instance, retail sales have continued to expand by some 20 per cent in the first two months of 2008, despite that country’s rising inflation rates.

“What we are seeing in the West, in countries like the US and the UK, is due to the fact that they do not have as much liquidity in the system,” said Naeem Ghafoor, the chief executive of Skyline Retail Services Consultancy in Dubai. “[In the UAE], we don’t suffer from lack of liquidity. If anything, we have an oversupply.”

Retail is the second-largest non-oil sector in the UAE and across the Gulf Co-operation Council (GCC). A recent report by property consultant CB Richard Ellis ranked the UAE eighth in a study analysing the attractiveness of 250 retail markets around the world. Wholesale, retail and repair contributed to 20 per cent of the UAE’s gross domestic product (GDP) last year, according to the study, with Dubai accounting for one-third of the country’s total retail development.

International retailers with a presence in the region generally operate under local holding companies, such as Al-Futtaim or Alshaya, and therefore are not subjected to the same burdens that are affecting their home countries.

Gains are reported across the board, especially in areas of discretionary spending such as fashion.

Muscat Duty Free, one of the leading retailers in Oman, closed 2007 with sales 11 per cent ahead of 2006. Dubai Duty Free, the world’s third-largest duty-free retailer, said revenue grew 24 per cent in 2007 to a record Dh3.18bn. The UAE gold and jewellery sector also reported overall gains for 2007.

“The Emiratis have a lot of disposable income,” said Mr Ghafoor. “They like to drive well, dress well, live well. To an extent, that goes for the expat community as well. Fashion is an industry that has a good future here.”

In contrast, most analysts believe that 2008 would bring bad tidings to the sector in both the US and Europe, and retailers there were bracing for a bumpy ride.

During his testimony to the Joint Economic Committee in Washington, Mr Bernanke pinpointed the bleak outlook. “Concerns about employment and income prospects, together with declining home values and tighter credit conditions, have caused consumer spending to decelerate,” said Mr Bernanke.

Retail is the second-largest industry in the US, based on the number of businesses and employees. Total retail sales in the US ended 2007 on a positive note – up about 3.8 per cent to Dh16.48 trillion, according to a Plunkett Research estimate.

American retail giants JC Penny and Gap are among the companies feeling the brunt of the slowdown now, having reported a drop in first quarter sales by 6.7 per cent and 6 per cent, respectively.

In spite of the optimism across the GCC, there are some retail areas struggling to withstand the impact of global inflation. The Abu Dhabi Department for Planning and Economy recently reported a 10.7 per cent jump in inflation last year.

Food, beverage and tobacco accounted for 11 per cent of that the widespread rise, and supermarkets across the region are reporting record-high food prices.

“The food industry is always impacted by world commodity prices, as opposed to the clothing industry, for example, which is much more disconnected,” said David Berrick, the general manager of retail for Abela Supermarkets.

Throughout the region the clothing and luxury goods retail sector has so far withstood the economic burden causing the commodities crisis, but industry analysts caution that they should not take the situation for granted.

A significant risk is posed by the secondary effect of inflation on the labour market.

“At some point in the future it will become very difficult to find a workforce here because people will not be able to afford living on the salaries that they [are] getting,” warned Mr Ghafoor.

“Salaries are not going up at the same rate [as inflation]. The retail industry needs to remain aware of the fact that staffing malls requires a steady workforce – and you won’t maintain [one] if the workers can’t afford to feed themselves,” Mr Ghafoors aid.

Dubai Shopping Festival

I attended the closing ceremony for the 13th Dubai Shopping Festival a few days ago.   Sheikh Hamdan bin Mohammed bin Rashid al Maktoum and Sheikh Saeed Bin Mohammed Bin Rashid Al Maktoum were on hand at the event.  

Since its launch in 1996, the Dubai Shopping Festival has grown significantly in both stature and profit.  The first festival, themed “One World, One Family, One Festival” grossed an estimated Dh2.15 billion (US$ 59 million) and hosted some 1.6 million visitors.  Last year, the event attracted over 3.5 million visitors, earning Dh 10.2 billion (US$ 2.78 million).While this year’s figures are not due out later this week, organizers say the event saw gains across the board.  “We broke records in various areas, particularly in lifestyle sales, electronics, and gold and jewelry which did especially great this year,” Ms. Suhail explained.  

 The gain in gold sales was welcoming news to the industry, which recently felt an overall slowdown in sales as world market prices dented demand for the metal.   Gold prices have risen in Asia recently.  The metal rallied 4.7 last weeks – its biggest weekly gain since Nov. 23 on higher oil prices and a weaker dollar.  Gold retail sales increased by 24 per cent in 2007 in UAE, 33 per cent in Saudi Arabia, 29 per cent in Egypt, and 19 per cent in the other Gulf countries, according to the World Gold Council. 

As of last year, DubaiCityGuide.com got in on the festivities, adding a virtual component to the festivities, including a shopping guide, as well as information on accommodation.  One page on the site lists the latest gold prices for jewelry from India (Dh9/gm), Italy (Dh7/gm), Singapore (Dh5/gm) as well as locally made products (Dh4.50/gm).  According to the online guide, over 25 tones of gold is on display in Dubai jewelry shop windows at any given time. 

The festival mirrored recent retail trends across the region.  In 2007, Abu Dhabi Duty Free reported robust growth across core categories, including beauty and fragrance products, liquor and tobacco, gold, confectionery products, and the best performer, electronics with a 52.2 per cent increase.

The United Arab Emirates is among the top 20 most attractive retail markets worldwide, according to A.T. Kearney, the Global Retail Development Index (GRDI), raking in an estimated Dh306 trillion (US$100bn) per year.   Carrefour is the country’s top retailer.