A ranking of the 12 best shopping cities in the world by CNN earlier this year showed New York at number one, followed by Tokyo and London. Nestled in at number nine was Dubai.
In the years to come, when the newly-announced Mall of the World is fully completed — in about a decade’s time — it’s a fair bet that it will move up a notch or two on that, or any best shopping destination list.
The emirate’s mall evolution took another turn last week, and moved on to a new level.
The boom years saw malls move from the traditional collection of global retail brands in one development to being, according to Cluttons, “leisure destinations in their own right”. There’s Ski Dubai in the Mall of Emirates, iFly in Mirdif City Centre and the many attractions at Dubai Mall (an vast aquarium, an ice rink, a Sega indoor theme park and a set of fountains).
That evolution was due to take another step with the opening of Yas Mall in November this year, where the 235,000 sq m of retail space and 450 retail outlets will connect with the soon-to-be expanded Ferrari World attraction.
However, the Mall of the World announcement has surpassed all before it, and created headlines all over the world due to the sheer enormity of the project.
Plans for the development were first unveiled back in 2012, as part of the Mohammed Bin Rashid (MBR) City development, but the concrete plans and details have gone beyond many people’s expectations.
The world’s first temperature-controlled city will occupy a total area of 48 million square feet and will house the largest shopping mall in the world with an area of 8 million sq ft. The cost? A cool AED25bn ($6.8bn), according to the chief executive of Dubai Holding — the entity that is managing the project — Ahmed Bin Byat, who said it would take ten years to build.
“That (AED25bn) is how much it will cost when it’s ready. That is in about ten years so we are talking about a requirement of about AED2.5bn every year for the next ten years,” Bin Byat told Reuters last Wednesday.
“This is a long-term project and we are betting strongly on Dubai,” he said. He added that the size of the entire project would be in the range of 48 to 50 million square feet.
The mall will take the form of an extended retail street network — different to anything else available in Dubai — and will house the largest indoor theme park in the world. It will be based between the existing Mall of the Emirates and the Madinat Jumeirah complex, in the heart of the city, well away from the original proposed location in MBR City.
Additional districts, including a theatre district to rival London’s West End, will be part of 7km long promenades connecting all facilities, which will include 100 hotels and 50,000 car park spaces.
“It’s one of the most ambitious real estate retail developments ever attempted,” says Phil McArthur, the managing director of McArthur+ Company, an advisory firm that specialises in shopping centres.
“That being said, if anybody can do it, Dubai can do it and His Highness [Sheikh Mohammed Bin Rashid Al Maktoum, ruler of Dubai] can do it. He has proven that he has been able to deliver over the past 20 years.
“Personally I don’t have a major challenge getting my head around how this could happen, but it is an unbelievably large project — over twice the size of the retail space that Dubai Mall has today,” he adds.
Karl Nader, principal at Strategy& (formerly Booz & Company) says the Mall of the World reinforces the confidence that exists in the UAE’s retail sector, which has redefined what people might expect from malls in creating destinations.
“In the GCC you don’t have natural shopping districts. If you go around the world — Paris, New York, Miami, or Milan — there are natural shopping districts, in the middle of cities,”says Nader.
“It doesn’t exist in the GCC and this is why people need to create these eco systems to attract the traffic accordingly. This is what the developers have been doing in the GCC.
“Look at the Mall of Emirates — it innovated with a ski dome. If you look at The Avenues in Kuwait, it was built over three phases and the strip is a bit closer to the shopping strip that they are talking about in the Mall of the World.
“They are trying to recreate certain things and to become more than just a mall, and become a destination by itself.”
In same week that Mall of the World was unveiled, Nakheel also announced plans to develop Deira Islands shopping mall, a 6.7-million sq ft retail, dining and entertainment hub at Deira Islands, its new 165 million sq ft waterfront destination development.
And that’s not all. Last year, the Ilyas and Mustafa Galadari (IMG) Group said it was looking for builders for the long-awaited Mall of Arabia, which will be spread over 4 million sq ft in its first phase, and will contain over a thousand shops. Nakheel Mall, a 4.5 million sq ft project on the Palm Jumeirah is scheduled to be built by 2016. The Pointe, also on the Palm Jumeirah and also built by Nakheel should be ready to open its doors in the same year. Majid Al Futtaim has plans to complete another mall in the International Media Production Zone by the end of next year.
Given the amount of retail space planned for the emirate, David Macadam, CEO of the Middle East Council of Shopping Centres, says an event like Expo 2020 will create the extra demand.
With a current influx of 10 million visitors per year, he expects Dubai to double, if not treble that figure in six years’ time.
“Right now, Dubai Mall and Mall of the Emirates, as two examples, are the most successful malls in Dubai and they’re both, we call them in the industry, overtrading for their size, which means they have more people than is probably comfortable to make the maximum sales potential inside each.
“By 2020, a low estimate of the number of tourists coming for Expo 2020 would be in the order of 20 million people.
“So already a lot of the people who are coming in to shop are tourists — probably 40 percent to 70 percent, depending on the day or month. When I say tourists, they are likely to be GCC tourists or from India, or from a three or four-hour flight away.
“When you look back statistically and say if those malls are overtrading today, then there’s a case to be made to almost double the space that’s available in terms of retail, just to handle the tourist trade.”
Macadam recalls Vancouver Expo ’86, which attracted over 27 million tourists. With a hub of 3 billion tourists within a five-hour flight, he suggests the numbers could match those and even go as high as 30 million.
McArthur says it’s a simple case of supply and demand.
“Drivers of demand are population increases, and tourism increases. I would say Dubai could check both those boxes,” he says. “Whether it can grow its tourism to 20 to 25 million is something that remains to be seen, but I would say all the strategies and infrastructure are in place.”
With all the new mall development planned, experts agree that the existing malls around the city have to almost reinvent themselves, or at least refresh their offering every few years.
“I know in the case of BurJuman [in the Bur Dubai area of the city] they’re spending a lot of money repositioning the shopping centre — adding a hotel and cinemas, and improving connectivity. That’s what those shopping centres have to do. They have to reinvent themselves,” says McArthur.
“No shopping centre can stay the same for more than five or six years without doing some kind of expansion, renovation or upgrading.”
Macadam adds that BurJuman is also adding a large Carrefour hypermarket to its offering, which he says will be “very viable in a densely populated area”.
He also agrees that malls can’t afford to stay the same for too long, pointing out that even the successful locations have been busy adding to their retail space.
“I think if you look at what’s going on at Dubai Mall, they’re adding another million square feet; Mall of the Emirates is having a big renovation, and adding a lot of space. These malls are being little pre-emptive to try and keep their offering fresh in front of people.
“If you look at Mall of the Emirates, it’s a very compelling retail environment. It’s so well received and the retailers are all doing so well that for shops such as Hermès, which is a very famous French brand, there’s no room there. They are waiting for space.
“When you consider that, it means that the demand inside the Mall of the Emirates is very, very high.”
Older malls, like Wafi, which opened in 2001 and remains a thriving shopping location, have been affected by more recent developments.
“In the case of Wafi, they were impacted by all of the new retail that has opened since Wafi opened, so they’ve been getting it on all sides — from Mirdif City Centre, Festival City, Deira City Centre. Wafi was really impacted by the opening of Dubai Mall, when it really lost its leading luxury position,” says McArthur.
In the UAE’s other big retail destination, Abu Dhabi, Yas Mall is expected to change the retail landscape when it opens in November.
The much anticipated development (first due to open in 2011) will immediately become the country’s second-largest mall, and will aim to stem the flow of shoppers towards Dubai.
“Obviously the investors and the developer have a vision to make a profitable destination. Whether that will happen in year one, year two, year three or year ten is something that I can’t tell you,” says McArthur.
“What I can say is that there has been a certain amount of leakage of customer base that leaves Abu Dhabi and goes to Dubai and perhaps that will help mitigate and help give those people a reason to stay in Abu Dhabi.”
The city will have more than just Yas Island to keep consumers in the city the next three to four years, with major schemes like Saadiyat Island and Reem Island, in addition to newly opening Galleria mall to offer competition closer to home.
“Yas will have challenges because there’s not an immediate catchment around the property but the mall is such a size that people will drive up to half an hour to 45 minutes to enjoy that kind of selection and variety,” McArthur says.
“People will drive past other centres to much larger centres where there is more authority in the brand selection,” he adds.
Nader says while the development will be positive for the city, he expects a slow start — the expected norm for any new mall.
“I’m looking forward to it because it’s going to change the landscape in Abu Dhabi. Yas Mall is a great development and if you look at the overall Yas Island development, it’s amazing.
“They’re really trying different ways to attract the traffic into in the island.
“I think the traffic at the beginning will be a little slow because there [are] a lot of things still happening for the project to be completed. Overall I think the mall will have a very positive impact on the retail landscape in Abu Dhabi.”
But for now, the headlines are all about Mall of the World. The first phase, which will focus on the mall aspect of the development, is expected to be completed within three years, with tenders due to be released in six months, Bin Byat said last week. The next chapter in Dubai’s economic growth has just begun.
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