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News & opinion

19 AUG 2018

The changing landscape of retail

With a powerful and very distinctive shopping culture in the Middle East, especially in the UAE and Saudi Arabia, the region is slowly positioning itself as one of the shopping capitals of the world.

Countries in the region have become a haven for international and local retailers, with the size of the sector expected to grow by 25 per cent, from $250 billion in 2016 to $313 billion by 2021, driven by a booming tourism on the demand side, and an abundant supply of world-class retail infrastructure, which is being further reinforced by a robust pipeline of investments. Moreover, the upcoming global events such as Dubai Expo 2020, and the FIFA 2022 World Cup, is further ammunition for the retail growth.

The current state of retail in the region

According to the JLL Global Cross Border Retailer Attractiveness Index 2016 of the top 50 most attractive markets for international retailers, Dubai ranked 4, Kuwait City 9, Abu Dhabi 11, and Jeddah and Riyadh ranked 12, establishing the Middle East as one of the most attractive destinations for luxury retail.

A favourable macroeconomic environment and great retail returns were the cause of the evolution of retail that happened in many cities across the region. The sector, according to Alfred Abi Antoun, the Head of Retail at JLL in KSA and Egypt, grew from the souk type malls and street retail into the typical community and regional shopping centres comprising of fashion stores, anchor stores and food courts.

Over the last few years, we have started to see the shift into more experience related concepts with homegrown brands, unique F&B concepts and a wide variety of entertainment, outdoor experiences where customers can shop-eat-play. There are many factors which drove this change, but it is mainly driven by the consumer needs which are critical in the retail evolution.

Alfred Abi Antoun

Meeting consumer demands

The retail landscape has seen a significant amount of change with the markets in the region proving to be resilient and dynamic globally, specifically in the UAE. As Anthony Spary, the Head of Investor Leasing for CBRE, states, market maturity, flexible licensing options and increasing tourist numbers are all essential factors with innovation as the primary driver to change and become market leaders in smart capabilities, as set out in the Smart Dubai 2021 strategy.

With various rising demands of the consumers in the Middle East, developers are looking to construct grander and more technologically adept mega malls with retailers banking on them to drive sales. Notable retail projects in the pipeline include:

Dubai Square Mall

Planned to be the largest leasable retail space in the world, spanning over 100 soccer fields in size, the Dubai Square is a $2 billion project, with innovative technology that will create a shopping experience amplified by custom-designed mobile apps, barcode scanning applications and radio-frequency identification.

Mall of Oman

Featuring 350 outlets, in a 137,000 square metre retail space, this project was fully developed in Building Information Modelling (BIM), ensuring that there was design coordination. Scheduled for Q3 2019, this will be the first mega-mall for the Sultanate of Oman, assisting the national vision of a tourism industry.

Mall of Saudi

A site of more than 800,000 square metres that will include shops, restaurants, entertainment, offices, hotels and residential units and Saudi Arabia’s first indoor ski slope, Mall of Saudi is slated to be the country’s largest mega mall. 

Setting Standards

Globally, retail is owned, developed, used and occupied by multinational companies across the world, making it have a more significant scope internationally than any other property type. With numerous retail projects planned in the region, a common measurement approach is crucial to ensure the standardisation of this sector.

Drafted by the International Property Measurement Standards (IPMS) Coalition, the new IPMS: Retail Buildings aims to establish consistent measuring practices for property assets and is created to inform global benchmarks on measuring retail. Measurement practices vary substantially across retail markets, with different Floor Area measurements being adopted across the world in construction, transactions and valuations.

Anthony Spary believes that IPMS: Retail Buildings will benefit regional retailers, both franchise groups and independent retailers, significantly by offering them a guide to international best practices that can be used when negotiating with either their existing landlords upon lease renewal or as part of acquiring new locations within the region.

With a significant amount of supply being delivered to the market in the next 18-24 months, we are seeing retailers adopting a favourable position with landlords when it comes to leasing negotiations, and these guidelines will further support regional members throughout this process.

Anthony Spary

With the increase of retail projects in the region, a globally recognised standard such as IPMS: Retail Buildings will revolutionise how projects are reported and managed.

To find out more about the standard, please visit https://ipmsc.org/consultation/