Nakheel awarded a contract yesterday to design a major new mall on the Palm Jumeirah in Dubai as it seeks to spend more than Dh1 billion (US$ 272.2 million) on an expansion into the retail sector.
The Dubai developer signed a Dh25m deal with RSP architects from Singapore to design the Palm Mall, set to have 83,000 square metres of retail space and be located on the trunk of the development.
The mall joins a growing number of retail projects being built or examined by Nakheel as it tries to diversify its business away from the property market, which has been one of the worst performing sectors in the economy in the past three years.
"Palm residents all very eagerly look forward to a retail product," said Sanjay Manchanda, the interim chief executive of Nakheel. "It's a very significant [development] for us as Nakheel. It's adding to the development of the Palm and bringing more good news and a commitment to our customers in developing sustainable communities."
The mall will have three floors, parking spaces for 5,000 cars and an open-air plaza on the roof. But Mr Manchanda said it had not been decided how many stores the shopping centre would hold.
Fujairah City Centre mall was opened earlier this month by Majid Al Futtaim, with 34,000 sq metres of retail space and 105 stores.
Mr Manchanda said Nakheel had already received requests from retailers to rent stores and that it would negotiate adding an anchor supermarket tenant.
"There is the potential [for the mall] to be a neighbourhood and tourist attraction," he said.
The Palm Mall is the latest in a number of retail projects to be announced by Nakheel, as well as other major developers throughout Dubai. Emaar is expanding Dubai Mall by 93,000 sq metres.
Nakheel is doubling the size of Dragon Mart, its China-themed shopping and wholesale centre on the outskirts of Dubai, and the company is also looking at doubling the size of Ibn Battuta mall.
The developer is in talks with banks to raise Dh300m in financing for a retail and residential project on the Palm called The Pointe. Mr Manchanda said all these projects combined would cost more than Dh1bn and that the developer was looking at all options to finance the expansion, including joint venture partnerships with mall operators.
"We are working on various alternatives for bringing these projects to the market," he said.
Nakheel announced profits this week of Dh1.3bn for last year, up 33 per cent on the year before. The news came as Jones Lang LaSalle, a property specialist, said the Dubai property market had bottomed out.
Nakheel also signed a Dh18m contract yesterday with Al Marwan Contracting from Sharjah for infrastructure work on Frond N of the Palm Jumeirah.