In the Gulf these days, creating a successful mall takes a lot more than stringing together a strip of retail shops. It requires a deliberately selected mix of familiar and unique brands, anchor stores, food and beverage outlets and over-the-top entertainment options; and there’s a certain art to getting it right.
“I call it aligning the stars,” Shem Krey, the man building what is planned to be the largest mall in Doha, Mall of Qatar, says.
“There are very few mistakes that you can afford to make in regional shopping malls, especially with the competition setting that’s happening in the Qatar market with the number of malls that already exist and the new ones that will be coming online two, three, four years after ours.”
Krey has just announced the Carrefour hypermarket as the first confirmed retailer for Mall of Qatar, which is scheduled to open in September 2015. But it won’t be the typical Carrefour already popular across the Gulf; this one will be more upmarket, with its own bakery and grocery lines and higher quality products, Krey says. A flagship for the region.
Getting the first anchor tenant right will pave the way for the entire 195,000 square metres (sq m) of leasable area within the mall. “It’s critical. On a scale of one to ten, it’s a nine in the decision-making process,” Krey says.
The Mall of Qatar is being built within the Al Rayyan Village, a new master development aimed at high net worth individuals in southern Doha. It claims to be the country’s first “super regional shopping centre” and will be the largest until Doha Festival City opens, due a year later.
Plans include more than 400 stores, with a particular emphasis on luxury, three anchors, a 19-screen cinema with IMAX, the country’s largest entertainment complex, a five-star fashion-themed hotel and 80 food and beverage outlets.
The early timing of the mall also means it will have the luxury of its own metro station when the Doha Metro starts running in 2019, while there are plans for 7,000 car spaces, a fair bit more than comparable shopping centres.
The QR3bn ($820m) project has been designed and developed by UrbaCon Trading and Contracting, which also will operate the mall when it opens.
The Mall of Qatar will be competing in an increasingly congested retail market. There are a dozen malls in the pipeline in Doha, including five that will be over 100,000 sq m.
But presently it is under supplied. Doha has 0.43 sq m of retail space per person, about one-fifth of Dubai’s 2.78 sq m, according to Phil McArthur, managing director of McArthur+Company, which is the Mall of Qatar’s leasing agent.
McArthur says Qatar has less retail space per capita than the UAE while its gross domestic product per capita is twice the UAE’s, and 46 percent of a Qatari’s wage is discretionary spending — what retailers rely on.
“Of that wealthy population, 52 percent has an income of more than $75,000 and 46.1 percent of that income is discretionary,” he told a retail conference in Doha in June.
“That’s a phenomenal number; I don’t think there’s anywhere else in the world where people have that much percentage of their total income to spend on whatever they want, and obviously shopping centres play a big role when people have money in their pocket.”
The Qatari population is expected to grow from 2 million to 3.1 million by 2022 and tourism numbers to double in the next decade, while $200bn being spent on infrastructure will undoubtedly have a wider economic impact, as well as the football World Cup, which Qatar is due to host in 2022.
“Obviously there’ll be winners and losers; in every market there are shopping centres that don’t succeed and shopping centres that are the favourites,” McArthur says.
So, then, which malls will come out the winners?
Collier International director Duncan Gray says assessing retail space in terms of supply and demand statistics is too simplistic. A review of the Qatari scene must also take into consideration the expected growth in the non-oil sector, which would boost the broader economy and spending.
“There is the potential for significant over supply, but you’ve got to temper that with the consideration of visitor numbers and the potential for those to increase, specifically in the tourism sector,” Gray says.
Krey is under no illusion that the Qatari retail competition will be tough, and not everyone will make it. But he insists the Mall of Qatar is “unique” and will have the extra value points to avoid fatality.
“There’s no disagreement that Qatar is going to be oversupplied in retail, [but] we believe it’s going to be an oversupply in medium-range retail product,” Krey says. “We believe that many of the malls that exist now as well as some of the malls that have just recently been finished are trying to attract a very local catchment and very local, medium-range market draw at a very certain medium-range price point.
“What is not available in Qatar is improved experiences for the family and a higher quality of shopping experience. We feel that we are going to be the tipping point and we’re going to be providing a class A-type regional shopping mall that’s going to be providing the full range of high quality retail experience.”
Krey, who has worked on various real estate projects in the Gulf, US and Europe for the past 35 years, says non-shopping experiences are becoming more important in malls than ever before.
“Absolutely. It’s most important here in this market because the mall is the refuge, it’s the city square, it’s the place where people go to communicate, to commune with their fellow people, to be in a place where the people are because of the heat factor and the sun load issue,” he says.
“In the retail experience today it’s essential that the shop mix is correct, that you have your elite luxury brands, your bridge brands, your high street brands and your value brands. There’s no doubt you have to have that mix right, that’s the ABCs.
“The other part of it is that retail malls of this size have to have the right food and beverage mix so we’ve come up with 80 different food and beverage, everything from tablecloths to fast food and food courts.
“In addition to that, the entertainment complex and entertainment menu is also just as important. So between the food and beverage, the great retail mix of brands and your entertainment, those three have to be just perfect.”
So seriously does he take the message, he’s created QLIVE, an entertainment concept that will be the “defining feature” of the mall, with ongoing events that will cover sport, live concerts and other entertainment, including daily Cirque du Soleil-like performances.
QLIVE also will complement permanent entertainment features including the cinema and a three-part digital entertainment centre that is being touted as the first of its kind in the Middle East.
The centre would include an adaption of the European Angry Birds Activity Park for young children, a futuristic Juniverse space station educational experience and “high octane thrills” for teenagers and adults at Virtuocity.
The digital theme park will be developed and operated by Qatari company Tal Bin Mohammed Trading, which has partnered with Rovio Entertainment and Adabisc Future Qatar.
The Mall of Qatar also will include a five-star hotel — one of the first of Hilton Worldwide’s new Curio brand, which allows owners to design their own boutique hotel.
“It’s a unique marketing angle by Hilton,” Krey says. “Curio comes from the word curious, that one should be curious about what this special hotel should be. So this is not a cookie-cutter type Hilton hotel, but one that you uniquely design and we’re planning on integrating this hotel with the elite fashion end area of the mall. Part of it is a big secret but there will be connectivity in many different ways. We’re planning on allowing the fashion theme to carry into the hotel itself; there’s some ideas that we have on that, to come.”
Across the board, Krey expects to have 70 percent of the mall’s tenants confirmed by October. Between 10-15 percent will be brands new to the region. He says he has taken a year to make some of the key selections, including for the hypermarket and cinema operator, Cinemacity.
“I don’t want to say that it’s a landlord’s market, but we do have the benefit of evaluating a lot of different brands for the same space, in fact that’s actually been our biggest issue in that for every space we have at least four brands that could use that space,” he says.
“So every time we make a selection, there are more people that are disappointed than satisfied. So it’s been competitive but at the same time that’s partly what’s made it difficult, is the availability of the brands in the market that are very attracted to coming to Qatar.
“The retail community out there, as we talk to them, are convinced that Qatar is one of the up and coming markets to expand their brand in.”
Mall of Qatar will be a focal point of Al Rayyan Village, where 10,000 villas designed for expats are being built. Krey, who says he is involved in talks about the entire precinct’s future, says there also will be at least one school, a museum, a hotel, office buildings, a sports academy and one of the stadia being built for the World Cup.
Krey says he working with the Qatar 2022 organisers on how the stadium would be utilised outside of the international tournament.
“There are a lot of synergies that can happen between the mall and the events that are planned at the stadium,” he says. “We can work on a lot of things jointly together, so we’ve had quite a few meetings already with Q22. We can’t say that any contracts have been executed but we’re well into many discussions to make it work.
“We’re also working with Qatar Tourism Authority to put another iconic tourism attraction in the plot just east of the mall, we’re working with schools to possibly put more private schools in the area and we’re working with the housing authority to put in more housing directly north of the mall.”
About 20 million people are expected to visit the mall annually. With 10-20 percent of the mall’s footfall expected to come from tourists, Mall of Qatar also will be competing against mega-malls in other Gulf cities, particularly Dubai Mall, which had 75 million visitors last year, according to developer Emaar.
“Certainly there’s that competition but I think Qatar is coming out with a very underlining family location, with the number of resorts that are under development… going dry, the image and the angle that Qatar is trying to represent to the world is more of a family orientated setting than you’ll find in the Dubai market,” Krey says.
It’s a similar theme: distinction. As the Gulf states ramp up their development and retail and tourism offerings, that word will take on ever more meaning.