x Abu Dhabi, UAESunday 23 July 2017

Where are all the customers?

Merchants in Musaffah cope with empty shops and higher rents as they wait for delayed development projects and a middle-class influx.

The shops inside the Mazyad Mall in Musaffah remain largely bereft of customers.
The shops inside the Mazyad Mall in Musaffah remain largely bereft of customers.

ABU DHABI // When Kamal opened a branch of his mobile phone shop in the new Mazyad Mall in Musaffah this year, he paid Dh85,000 (US$23,000) in annual rent - more than double what he pays for a similar shop in central Abu Dhabi. But, in contrast to his downtown business, he barely has any customers in Musaffah.

Now he and many other merchants who moved into the mall anticipating an influx of new middle-class residents from massive development projects that have yet to materialise are starting to think they have made a mistake. "There are no customers and the rent is high, so it's not really worth it," Kamal said. On a recent afternoon, the pricey speciality stores surrounding his shop were also largely empty - in contrast to the Lulu supermarket on the ground floor, which was packed with construction workers from the labour camp across the street.

The fact is that Musaffah, known mainly for its sprawling labour camps and enormous industrial sites, is still not a place for Emiratis and middle-class professional expatriates. A small number of professionals may be trickling in from Abu Dhabi, but they have yet to make a significant impact on the struggling businesses. Jalal Khalil, 24, who manages an antique shop, says the business barely breaks even after paying Dh220,000 a year in rent.

"The area is flourishing in terms of construction projects," Mr Khalil said. "There are many new villas and streets being built, but I am not seeing any change in terms of the demographics." He added: "The people who live here are low paid, and therefore not much shopping is going on." Construction workers sometimes visit his shop, he said, but they cannot afford to buy anything. "People heard that many Emirati families were moving to this area," he said. "Those were mere rumours and yet rents went up because of these rumours. How can a developing area have this high rate of rents?"

A one-bedroom flat at the Mazyad compound rents for around Dh80,000 a year, comparable to prices in central Abu Dhabi, while studios are Dh60,000. Mr Khalil said he had planned to live in Musaffah, but has changed his mind. "There is an obvious gap between the kind of people who live here and the projects that are being done here," he said. he had hoped to be making at least twice what his business makes now. He had also expected that Emiratis would be his main source of income - but not always the same 15 Emirati women who regularly visit his shop.

However, people involved in the development of the area say they believe things will get better. For instance, Mark Adams, the general manager of Dalma Mall, which is still under construction, expects the mall to attract more residents, as well as service surrounding communities such as Baniyas, Mafraq, Wathbah and Shahama. "Dalma Mall has taken a leadership position and you will see new developments all around this property over the coming months, years and well into the future," he said.

Its location, close to Abu Dhabi International Airport, he said, is strategic. "No one in Abu Dhabi's growth corridor is more than a 20-minute drive away." The mall, which aims to become a central shopping and leisure destination for suburban Abu Dhabi, and is expected to bring well-known brands such as Borders and Marks & Spencer, as well as a cinema, and will even attempt to attract residents of central Abu Dhabi.

"This means more visitors, increased home values, therefore bringing more developments," Mr Adams said. "Musaffah has big plans and will blossom into a residential area over the next few years." Convenience, Mr Adams said, is the mall's main competitive advantage; it will be easy to get in and out, both in terms of the drive there, and the parking. Other major projects in and around Musaffah include Manazel's $1.1-billion Building Materials City, the region's first building-materials trading exchange. It is supposed to have office towers, residential units, a mall and hotel.

The economic impact of the development of Abu Dhabi's suburbs will, in the long-term, benefit medium to low-income categories of society, added Imad Jamal of the Contractors' Association, UAE. "This in turn will reflect overall on the economy of the country in the positive way. It will open up opportunities for other sectors and, of course, development." According to the real estate consultancy Colliers International, the gross leasable area of the capital will climb by 53 per cent to 870,000 square metres by 2010. It has forecast an annual growth of 19 per cent in retail sales.

Future developments in the suburbs will include health clinics, parks, public areas and mosques. Some customers in Mazyad Mall, however, questioned the need for new malls, at least in the short term. Vlad Boico, a former Etihad Airways staff member from Moldova, said the only shops that experience a modicum of success in the mall were the grocery shops and cafés, and they are hardly full. "People buy what they need and leave. Why would you open a new mall?"

"But we have to look at it in a different way," he added. "They are, perhaps, doing that because they know they will need them one day, and these projects will have to be here sooner or later." While some businesses are struggling and losing hope, others are betting on the much-anticipated expansion to pan out. Islam Abdul Hadi, manager of Beyond Glasses shop, confirmed that business was slow, but he remained upbeat about future growth.

"I guess in two or three years, this area will be fully populated and the business will be very good," he said. In the meantime, he depends on the few local and western customers who bother to visit. newsdesk@thenational.ae