Fresh doubts cast on Dubai's Mall of Arabia
The CEO of Gulf retail giant Landmark Group has raised questions over whether Dubai’s Mall of Arabia, billed as one of the largest shopping resort in the world, will go ahead.
The mall is part of the $5bn City of Arabia project being developed by the Ilyas and Mustafa Galadari Group in Dubailand. The centre was scheduled to open at the end of 2010.
“I don’t think Mall of Arabia is coming along. I don’t know when that’s going to happen, if that’s going to happen,” Vipen Sethi, CEO of Landmark Group, told Arabian Business.
The company has a “big commitment” to Mall of Arabia in terms of store openings, said Sethi.
“There is very little work being done in Mall of Arabia. We go to the site and we drive past and nothing has happened there.”
Bahrain-based Landmark Group is one of the most influential retail chains in the Middle East. The company operates 900 stores in 14 countries, and claims a turnover of about $3.8bn.
Landmark on Wednesday announced it will invest $54m in opening 100 stores across the MENA region over three years.
Branded as ‘one of the world’s largest malls’, Mall of Arabia is expected to have a gross leasable area of four million square feet in phase 1, more than 1,000 retail outlets, a rooftop hotel and access to the dinosaur-themed Restless Planet theme park.
Like many Dubai real estate projects, the mega mall has been delayed in the wake of the emirate's property correction that has seen developers struggle to secure financing and complete projects.
On opening, Mall of Arabia will be competing for footfall with existing shopping centres such as Dubai Mall, which opened in November 2008, and Mall of the Emirates.
The Dubai market may struggle to accommodate another large mall, said Sethi.
“There is a saturation of retail space here in Dubai.”
Ian Gladwin, CEO Middle East of real estate firm Cluttons, warned the design of Mall of Arabia may need to be scaled down in light of the fragile economic environment.
“I think [Mall of Arabia] will have to be re-addressed in terms of the feasibility of the numbers and the size of the development will have to be re-addressed,” he told Arabian Business.
“Key to that size of development coming into the market is demand and take-up, and then footfall. It cannot be clumsily dropped into the market without good research going forward.”
A retail report released in August by Mumbai-based Bharat Book Bureau research firm highlighted the fact that the amount of leasable retail space in Dubai had increased by 263 percent between 2006 and 2010.
A study by real estate consultants CB Richard Ellis (CBRE) found that retail rental rates in Dubai averaged around $679.60 per sq m per annum in the second quarter of the year, a drop of 56 percent on pre-crash rates.