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Dubai's biggest of them mall

On May 5, government-owned Dubai Holding announced that it has been instructed by the country's ruler, Sheikh Mohammad bin Rashid Al Maktoum, to start work on the world's largest shopping zone as the centrepiece of the Bawadi development, part of the $63.4 billion Dubailand project.

The project is to bring together a vast network of shopping malls, boutique arcades, streets lined with outlets and an underground retail complex in one enormous development.

When completed in 2016, Bawadi, a $27.25 billion hospitality and leisure zone within the Dubailand project, will have 3.6 million square metres of retail space and is intended to be a focal attraction for the country's tourism industry in which Dubai is investing heavily as part of its program to diversify its economy.

With its recreational facilities including theme parks, museums and cultural attractions, combined with a wide range of accommodation and vast shopping options, the aim is for Dubailand to draw in some 15 million visitors annually by the middle of the next decade.

Bawadi will serve as a major boost to the overall Dubailand development, said Saeed al-Muntafiq, executive chairman of Tatweer, the part of Dubai Holding that is conducting the project.

"It will, undoubtedly, accelerate our drive to develop a world-class hospitality and tourism project in Dubai and the region," he said on May 4.

In total, the new shopping area's gross leaseable area (GLA) will be four times the size of the yet to be completed Dubai Mall and 17 times larger than the Mall of the Emirates, which currently holds the title of being the biggest retail complex in the emirate.

Apart from the immense shopping boulevard, Bawadi will have hotels with a capacity for 29,000, entertainment and convention centres and an upmarket residential component.

While the Bawadi development will be the largest retail centre in the emirate and the world, it certainly will not lack for competition. Even before the Bawadi development was announced, Dubai was in the midst of a massive retail space construction boom, with a 209% increase in retail space tipped by the end of 2010, bringing the total GLA to 4.25 million square metres.

Only days before the release of the detailed plans for the Bawadi project, local developer MAF Shopping Malls announced it was to spend $700 million on a shopping complex on the Emirates Road. The mall, to be known as the Mirdif City Centre, is to cover 183,400 square metres and house more than 430 retail outlets.

However, unlike the Bawadi development, which targets the tourist trade, MAF's new mall has local residents in mind as its client base.

MAF's chief executive officer, Graham Drevermen, said the site of the new mall was in the middle of the fastest-growing area of Dubai, one that has been earmarked for major residential developments in the next five years.

"By 2010, the population of the centre's trade area is estimated to grow to over 530,000, with an anticipated 15.6% a year growth rate and a matching retail spending forecast of over $2.43 billion," he said in a May 1 interview with the local press.

However, there have been a few notes of warning sounded on the mushrooming of malls and retail space across the emirate, with some concerns as to whether the economy can sustain such an expansion. A recent report from real estate firm Colliers International said that per capita retail spending in Dubai will have to more than double the present $3500 to $8400 by 2010 to keep all of the retailers occupying this vast network of outlets in the black.

If all goes according to plan, this should not be a problem. In the Dubai Strategic Plan, set out by Sheikh Mohammad in February, Dubai's economy is projected to expand by 11% annually, with the country having a gross domestic product of $108 billion by 2015 and per capita income of $44,000, enough to sustain the increased retail space.

Drevermen also rejected any suggestion the emirate would be oversupplied with shopping space.

"The United Arab Emirates' per capita GLA is one square metre compared to three square metres in the US and two square metres in Europe," he said. "This means, even at the current population size, there is room for more shopping malls."

Jason J. Nash is Head of Research at the Oxford Business Group
(www.oxfordbusinessgroup.com)

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