Majid Al Futtaim, one of the largest developers of shopping centres in the Middle East, hopes to build a “mega mall” in Abu Dhabi to join a wave of retail developments being built across the capital.
The developer, which owns and operates Mall of the Emirates in Dubai and also manages Carrefour in the region, is examining plots of land on which to build the mall, at a cost of about Dh3 billion (US$817 million).
Retailers and developers in the UAE are investing in new stores and malls as tourists continue to flock to the country, spending on shopping and entertainment.
Hundreds of shops are due to open in Abu Dhabi this year as new shopping centres come online and existing ones, such as Al Wahda, finish extensions.
“Our market research and indication from tenants that have worked with us is that Abu Dhabi on the island … would be a good business proposition,” said Iyad Malas, the chief executive of Majid Al Futtaim (MAF), as the company announced its audited results for last year. “But can we find the right place, at the right price? [That] is the challenge.”
MAF owns some of the most popular and profitable mall space in the UAE, but has yet to venture into the retail market in Abu Dhabi to build a mall.
In 2010, it pulled out of a 1.5 million square metre mixed-use project on Abu Dhabi island called Arzanahas the space allocated was too small to accommodate a major mall.
The company operates five malls in the Emirates, including Mirdif City Centre, Deira City Centre and Sharjah City Centre, as well as nine hotels. It is set to open Fujairah City Centre early next month.
Abu Dhabi’s retail landscape is set to change in the next two years as a number of big malls are forecast to open, including Yas Mall, which will offer 235,000 sq metres of retail space and be the second-biggest shopping centre in the UAE, behind Dubai Mall.
This year, a total of 260,000 sq metres of retail space is expected to be completed in Abu Dhabi to add to of 1.67 million sq metres currently available in the capital, according to the property consultancy Jones Lang LaSalle.
Builders are scheduled to hand over three malls: Paragon Bay on Reem Island; Capital in Mohammed bin Zayed City; and Deerfields Town Square in Al Bahia.
“We believe Abu Dhabi can bear an attractive destination mall as close as possible to the Abu Dhabi island,” said Mr Malas.
He added that MAF was still in the very early stages of examining the planned new project, but it would aim to offer 160,000 to 180,000 sq metres of retail space.
The developer is also considering land in Riyadh, Saudi Arabia, to build a mall.
In Dubai, other mall developers are also trying to tap into the growing retail market. Emaar Properties said last month it planned to increase Dubai Mall by 92,900 sq metres on top of its current size of 1.11 million sq metres,
Al Ghurair Groupspent Dh2bn on expanding Al Ghurair Centre and is adding 25 per cent more space to BurJuman Mall.
Meanwhile, Nakheel is doubling the size of two of its malls, Ibn Battuta and Dragon Mart, and is also examining a Dh300m retail development on the Palm Jumeirah called The Pointe, as well as Palm Mall, which is expected to have about 80,000 sq metres of leasable retail space.
Having announced results for last year in January, Maf yesterday confirmed the audited figures. Revenues increased 10 per cent to Dh19.6bn last year, compared to the previous year, and profits before tax from recurring operations grew 19 per cent to Dh2.8bn.
“Our success in 2011 has fortified our foundation to further develop the business in both new and existing markets,” said Mr Malas. “We had an excellent year despite political and social turmoil in some of the Mena [Middle East and North Africa] markets, a true testimonial to the resilience of our business fundamentals.”
Maf marked down assets in Bahrain and Egypt by Dh300m and Dh250m as a direct result of the Arab Spring. But its total assets across the Middle East were revalued higher on strong performances in its malls, such as Mall of the Emirates.
Tourist numbers in Dubai rose 10 per cent to 9.3 million last year from 2010, and Abu Dhabi had a record year, with 2.1 million visitors, up from 1.8 million in 2010.