Geant will open a hypermarket on Yas Island as part of the French retail brand's expansion plans in the Gulf. Mazher Papar, a director at Retail Arabia, said cheaper shop rents were behind the company's decision to open its first Abu Dhabi store at Yas Mall in 2012. Retail Arabia, based in Bahrain, holds the Geant franchise rights for the GCC. The 16,000 square metre hypermarket, three other large stores and about 20 convenience shops are part of Geant's regional expansion plans in the next two years at a cost of up to US$80 million (Dh293.8m).
Mr Papar said expansion had been put on hold because it would have been too expensive, but that has changed with falling retail rents and consumers looking for budget-friendly shopping options. "Now the numbers make sense," he said. "And what has happened is the casual retailers or the short-term players have all exited or are in trouble right now. So this presents us with a lot of opportunities."
The new Geant hypermarket, coupled with IKEA's plan to open its largest regional store on Yas Island by next year, are the first signs of the island's retail centre taking shape. Construction on Yas Mall is already under way with the foundations and the car parks completed, said Fred Douglas, the director of leasing at Aldar, which is the master developer of the island. The Geant hypermarket will anchor the 250,000 sq metre Yas Mall, and marks the start of the shopping centre's leasing process, Mr Douglas said.
In the past year, retail rents in Abu Dhabi and Dubai have fallen steadily since the economic downturn. While some of the prime retail centres continue to see strong demand, some of the smaller developments have dropped their rates, according to the property consultancy Cushman and Wakefield. In the fourth quarter of last year, rents in Dubai and Abu Dhabi fell 30 per cent and 25 per cent respectively from their peak a year earlier.
Mr Douglas said Aldar had not reduced its rental rates at the three-storey Yas Mall. But Mr Papar said rental rates in other shopping centres had dropped enough to warrant a big push for Geant. "In the past few years the market was crazy," he said. "There was such a hype about the market, the costing was out of whack. It did not make long-term business sense to sign up at those rentals. "Now with the slowdown, it has actually worked to our benefit."
The group has opened one convenience store in Dubai called Geant Easy, and plans to open about 20 more across the GCC. Retail Arabia also intends to double the number of its Red Tag discount fashion stores across the Gulf to 100 over the next two years, said Arif Shaikh, a director with the group. Opening these outlets would cost about $35m, Mr Shaikh said. Amid the recent economic uncertainty, regional consumers are switching from luxury to bargains, said Mr Papar.
"People have stopped buying the high-end products and are looking towards value," he said. "Now people are very cost-conscious and they're looking at savings in a more rational way." firstname.lastname@example.org