Al Futtaim Group's director of electronics and real estate on the future of Dubai Festival City
Vishesh Bhatia began work for the Al Futtaim Group in 1978. Well-acquainted with most of his front-of-house staff and armed with a wealth of knowledge about the firm’s development, his lengthy period of service certainly shows.
From the comfort of his Festival Tower offices, which boast an impressive view of the Dubai skyline, the director of electronics and real estate says he is very excited about the year ahead. Not only is he expecting to see growth in some areas following the challenging post-recession years, but he is also plotting the overhaul of the group’s flagship shopping mall in its multi-billion dollar Dubai Festival City development.
“The mall is about five years old, it needs a refresh,” he says. “In the next six months, you will see substantial activity in this direction. It will be phased, so some things will be done immediately — small things like improving lighting and navigation around the mall — and then there are the more structural [changes], which will take a bit longer.
“It will probably take us 24 months before we finish the whole thing. Part of our mall is less occupied than it should be, so we’re also talking to some new retailers to see if they would be interested to come here.”
He declines to specify how much would be spent on the upgrade, but remarks on how the investment will be significant, and certainly in the region of millions of dirhams. He says the plan is to do “exciting things” in a bid to boost the number of shoppers.
“This is a major refresh. The group is prepared to invest. It will not be insubstantial. You can’t just refresh by spending AED1m.”
Retail property analysts would say he has the right idea. Despite reports of a retail boom for the industry’s heavyweights, many experts have referred to the emergence of a two-tier retail market in Dubai as the competition heats up, with a glut of prime retail space pushing out some of the older malls and forcing them to slash rental rates.
Bhatia says the Festival City mall remains attractive due to the large number of food and beverage outlets, abundance of free parking and new promenade, but could use some changes in certain areas to improve the visitor experience and support retailers’ sales programme. One important part of the upgrade will be to add more entertainment aspects, which should increase dwell time in the mall.
“We actually have a very strong food and beverage offering, we have close to 80 F&B outlets, that’s a lot. Some are doing very well, Hard Rock Cafe is one. But we need to have an entertainment aspect. We are looking for people with experience and background to come into our organisation and give this fresh impetus.”
The retail environment, in the meantime, is likely to remain challenging for some brands, but Bhatia makes clear the group’s intentions are to help stores where possible. “Some do very well; some not so well. That’s not atypical of this kind of business. There is no doubt there is pressure on lease rates. When business goes down, shops look for support on the rental rates, because these are one of the largest costs other than manpower. We help retailers of course. We keep looking at [rents].”
As for the rest of Festival City, Al Futtaim is taking its time finishing construction of the masterplan, which was halted in the wake of the economic downturn due to a widespread slowdown in the emirate’s property market. As it stands, the site currently boasts a wave of residential space, two commercial towers (including Festival Tower), two hotels (the Intercontinental and the Crowne Plaza), two schools, an automotive showroom park, a golf course and a shopping mall. It is likely to see further development in the future in areas where it makes good commercial sense, with plans for more residential buildings next on the agenda.
“What we’ve built so far is about 35 to 40 percent of the total masterplan, so there is still a long way to go,” says Bhatia. “We have just built our first building in our business park which is now occupied fully, and also another 24 villas. We have plans to build more, absolutely. As we speak we are busy rolling out more residences. We are looking at doing two small apartment blocks behind the villa complex next to the golf course. The plan is for between 70 and 150 apartments, and we are also looking at more villas.”
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