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Mon 1 Jan 2007 01:45 PM

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DFC raises the retail bar

Ambitious retail, commercial residential development sets high standards

Dubai Festival City raised the stakes in the emirate's retail sector in December, with the opening of its waterfront shopping centre.

Dubai Festival City, one of the most ambitious retail, commercial and residential projects in the Middle East, entered the latest phase of its development in December with the opening of Festival Waterfront Centre, a new shopping, dining and entertainment resort.

Festival Waterfront Centre is the second phase in the development of Dubai Festival City's retail district, and follows the opening of Festival Power Centre, Dubai's first ‘big box' retail centre. In November 2005, ‘big box' anchor retailer Ikea opened, followed in May 2006 by a HyperPanda hypermarket, Ace Hardware and Plug-Ins Electronix.

The latest phase of the development at DFC adds four kilometres of waterfront development encompassing retail, residential, hospitality, business, educational and leisure facilities stretching along the Dubai Creek, making Festival Waterfront Centre the first retail waterside resort of its kind in the Middle East.

Marks & Spencer's latest department store - the largest outside of the UK at about 65,000 sq ft - opened at festival Waterfront Centre to coincide with the start of Dubai Shopping Festival in December. More stores and restaurants will continue to open through the course of 2007.

Phil McArthur, managing director, shopping centres and commercial real estate for the Al-Futtaim Group said: "Festival Waterfront Centre will bring together the most diverse selection of waterfront dining venues, retail brands and entertainment in the Middle East at an exceptional Creek-side location. This is a first for Dubai and the Middle East."

Architects Jerde Partnership and HOK designed the retail resort to feature 550 retail shops, including 25 flagship and anchor shops - the largest collective number in the Middle East - as well as many new-to-market speciality boutiques and international brands.

When completed, the resort will include 90 restaurants, bistros and cafés. Guests will be able to enjoy dining, and Canal Walk, a crescent shaped waterfront. Some 40 restaurants and cafés along the length of the 450-metre canal will offer international cuisine.

"I don't think we're missing anything in terms of a retail offering in the value market, the middle market, or the upper market," McArthur said. "That's the idea - it's covering the whole gamut."

The Skywalk Entertainment Level, scheduled to open later in 2007 features the 12 screen Grand Cinema, Fitness First, Skywalk Food Court, Electronics Collection, Bowling City and a family entertainment centre.

A fleet of Jalboots - or water taxis - will travel along the length of the fresh water canal operated by local abra captains, who will entertain passengers with stories of Dubai's history. Three docking stations will transport passengers to hospitality destinations including two Creek-side pavilions opening in mid 2007.

A major feature of the progressive opening of Festival Waterfront Centre will be waterside dining and retail pavilions located just across canal walk and overlooking Festival Marina. One of the pavilions, ‘Trade Routes' has been designed with influences from the ancient trading networks to create an authentic Arabian environment and to offer merchandise from across the region. The second pavilion will include popular international dining and also a range of nightspot venues.

The Creek-side promenade will extend the full length of the development with access to more than 100 berths at Festival Marina. Guests will be able to dock at the quayside wall, then shop, dine, or simply enjoy the ambience and entertainment. Festival Marina is scheduled to open in early 2007.

Another 2007 opening will be the 25,000 square foot Dubai Gold Marketplace featuring 60 shops that will showcase the finest collections from the world's leading gold retailers, as well as offering custom-made designs in a relaxed air-conditioned environment.

The heart of the centre will be Festival Square, which will include a light and water feature. This meeting place will act as a setting for exhibitions and fashion shows with the creek and canal walk as a stunning backdrop.

Dubai Festival City's retail areas are being designed to have a combined capacity of about 100,000 people. "Many of us have worked on other projects [in the Middle East], so we believe that somewhere between 20 million and 25 million people a year is a reasonable target. That's why we have 12,000 parking spaces because we need to have that kind of parking facility. Of those, 6,500 are right underneath the shopping centre, which we built two years ago," McArthur said. He thinks that DFC will attract that many people in the second or third year.

With the completion of the 12- lane Ras Al Khor Bridge and road network in early 2007, Dubai Festival City will have three dedicated off ramps leading directly to the centre, making it one of the most accessible destinations in Dubai.

This will be further enhanced with the addition of the new Garhoud Bridge and ongoing improvements to Dubai's transport infrastructure.

Furthermore, with Dubai International Airport just two kilometres away from the development, Dubai Festival City's retail, dining and entertainment resort is likely to become a leading destination for the 15 million tourists that are anticipated to visit the emirate each year by 2010.

"We have almost 400 retailers and each of them wants to make a profit. The only way to get high sales is to get new customers in your store or you get customers from other places. Market share is a very important aspect of our project."
Too much capacity?

With so many retail mega-projects being developed and planned in Dubai, there is increasing speculation that some could fail if demand starts to lag behind the unprecedented scale of development. And Phil McArthur readily admits that while a few years ago there was more demand than retail capacity, he thinks the situation is likely to change in the next few years.

“Supply of organised retail space in Dubai is 14 million sq ft,” he said. “If everybody does what they say they’re going to do and everything that has been announced and everything that is in the pipeline is carried out, that amount of gross leasable area will increase to about 45 million sq ft, so we’re going to see a trebling of retail space in the next four or five years.”

McArthur added that the population in Dubai growing by about 8% to 10%, and tourism is also growing, with the current figure of nine million tourists a year projected to rise to a possible 15 million by the end of the decade. “The big question to ask is: ‘is there more space than demand?’” he said. “I think we’re seeing a cycle where we had more demand than space and then we had some great centres built like City Centre and the Burjuman expansion, Mall of the Emirates and Ibn Battuta. All of these centres are trading successfully, and more people are building. There may be an oversupply for a period of time while demand catches up.”

Despite this, McArthur is confident that DFC will be successful, although he admits that some shopping centres in Dubai are likely to be squeezed out by the competition. “There are going to be winners and losers and from our experience in the retail business, we know that the losers end up being the ones that are older concept centres, are a little smaller.”

Furthermore, DFC is likely to take customers away from other shopping centres. This is a competitive business,” McArthur said. “We have almost 400 retailers and each of them wants to make a profit. The only way to get high sales is to get new customers in your store or you get customers from other places. Market share is a very important aspect of our project.

McArthur also pointed out that many of the larger shopping developments are based in different areas of Dubai, and that these areas effectively have their own trade zones. As long as each shopping centre attracts the majority of its customers from its own area, each development should be able to prosper. “Each of the big projects operate in their own trade zones, and as long as there is not too much competition in each trade zone, I think we can absorb it,” he said. “When I talk about market share, it’s market share in residential, commercial, hotels, retail and restaurants. We know the competition and we have a lot of respect for it. We think some of the retail and hospitality facilities that have been built in Dubai in the last five years are world class and we know that the bar is raised higher and we are going to have to work very hard to get that market share.

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