Nakheel bucked a downturn in retail spending to record an increase in like-for-like retail revenues last month at its Ibn Battuta Mall compared with last year.
Retailers across the UAE have come under pressure from the weak oil price and a strong dollar to which the dirham is pegged. This has increased job insecurity and dampened consumer sentiment while the purchasing power of some overseas visitors has weakened.
Nakheel, however, has pushed ahead with its Dh16 billion investment in retail expansion. Its burgeoning retail portfolio was enhanced further yesterday as the developer opened its first community mall in Al Furjan, a residential district close to the vast Discovery Gardens development on the outskirts of the city.
The Dh110 million Al Furjan Pavilion is the fifth Nakheel Malls project to open this year in a Dh1.5bn investment into mall development.
While only about half of the 24 retail spaces in Al Furjan Pavilion are open, the mall is 80 per cent pre-leased and is expected to be fully operational in a few weeks.
“We have seen only strength in the retail market as retailers continue to push for space in our malls,” said Ali Rashid Lootah, the chairman of Nakheel. He said the level of pre-leasing activity reflected a buoyant market.
“We have not dropped rental prices in our malls, which underlines the buoyancy of the market. We are set to beat last year’s profits and we expect recurring income to cross Dh2bn this year. We have a pipeline that includes a second Al Furjan Pavilion with 35 outlets along with The Pointe on Palm Jumeirah, which will both be delivered in Q1 2017.”
Nakheel’s push into retail development has been part of a strategy to create recurring income-generating assets rather than one-off sales, such as its villa developments.
This year, Nakheel opened Dragon Mart 2, Ibn Battuta Phase 1 extension and the Metro link, Club Vista Mare on Palm Jumeirah and International City Pavilion.
Beyond next year, it has Nakheel Mall on Palm Jumeirah to be delivered in 2018 and Deira Islands Mall in 2019 or 2020.
“The move into retail development was a good idea to create income-generating assets,” said Matthew Green, the head of research for property consultants CBRE. “There are good returns for well-run retail spaces in good locations, which Nakheel obviously has. It’s a net positive because it also creates self sufficient liveable communities, which become more habitable and, therefore, more attractive.
“I am surprised by the performance of Ibn Battuta Mall, outperforming last year, because this year has not been good for retailers. Its either an anomaly or possibly customers are looking for more value-orientated retailers, which Ibn Battuta is well stocked with.”
ascott@thenational.ae
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