The changing retail landscape in Muscat Developments & opportunities Oman Real Estate Conference May 2014
INTRODUCTION
Ian Gladwin 3 Head of International for Cluttons. Fellow of the Royal Institution of Chartered Surveyors (RICS). Over 20 years real estate experience throughout the Gulf region. Prior to joining Cluttons, I worked extensively in Kuwait and the Northern Gulf with a particular focus on the retail sector. Recently appointed as the Regional Representative for Oman for the Middle East Council of Shopping Centres (MECSC).
Presentation overview 4 Key regional retail trends. Muscat consumer profile. Muscat a changing retail landscape. Market gaps and opportunities. Conclusions.
KEY REGIONAL RETAIL TRENDS
Abu Dhabi 6 Significant expansion Rapidly developing retail sector Buoyant economy with a wealthy population Focus on the Saudi Arabian customer
Bahrain 7 Saudi Arabian customer base Mature market Driven by Saudi Arabian consumers
Kuwait 8 Sophisticated market A developed and sophisticated retail sector High spending power Focus on luxury
Qatar 9 High spending power Developing market High GDP per capita Significant spending power of the customer base
Dubai 10 Return to growth High consumer spending power Rapid resurgence and development Neighbourhood retail development Tourism driver
MUSCAT CONSUMER PROFILE
Consumer profile 12 The population Rapidly growing. 1.2 million people in Muscat (40% Omani and 60% expatriate). Generally a youthful population. Expanding westwards. Spending power and patterns Rising but relatively limited incomes. Average per capita monthly income of RO 175. Average household expenditure of RO 900 per month. One third of monthly household expenditure (RO 300) is on food. Around RO 30 of monthly household expenditure is on dining out.
MUSCAT A CHANGING RETAIL LANDSCAPE
From souqs to malls 14
First generation malls 15 The malls SABCO Centre Al Araimi Complex Al Khamis Plaza Al Qurum Complex Al Harthy Complex Zakher Mall Key features Centrally located 5,000 to 15,000 m² leasable space Generally no anchor stores Cultural shopping habits. Food and fashion. Social ability. Traditional trading hours. First generation format. Brand mix and identity.
The new generation 16 The malls Markaz Al Bahja 2000 Muscat City Centre - 2001 Qurum City Centre - 2008 Muscat Grand Mall - 2012 Key features 20,000 m² plus leasable areas Anchored by a super/hypermarket More complex design with sub-anchors and zoning
Retail mall supply 17 Existing supply Muscat currently has approximately 350,000 m² of retail space in purpose-built retail centres. The larger malls are: Mall Approximate leasable area (m²) Muscat City Centre 56,500 Qurum City Centre 20,600 Tilal Grand Mall 45,000 Markaz Al Bahja 20,500 Zakher Mall 15,800 Al Araimi Complex 12,000
Retail mall supply 18 Under construction Two new malls in Bausher should be completed this year and will deliver an additional 80,000 m² of larger scale retail mall space: Mall Approximate leasable area (m²) The Avenue Mall (Lulu extension) 60,000 Panorama Mall 21,000 Three smaller malls are also due for completion this year: Mall Approximate leasable area (m²) Jasmine Complex, Al Khuwair 4,000 Al Marsa Retail Centre, The Wave 6,000 Military Retail Mall, Mawalleh South 8,000
Retail mall supply 19 Proposed There is also a very significant pipeline of proposed retail mall space.
Retail mall supply 20 Downtown Muscat, Mabellah South A development by the Al Jarwani Group projected to provide around 80,000 m² of leasable space with extensive leisure/entertainment facilities.
Retail mall supply 21 Mall of Oman, Bausher Development of a 157,000 m² plot by Majid Al Futtaim Group (MAF) with a RO 180 million retail mall providing around 350 retail outlets.
Retail mall supply 22 Muscat Festival City, Airport Heights Super regional mall anchored by Ikea located at the Oman Convention and Exhibition Centre in Airport Heights.
Retail mall supply 23 Muscat Grand Mall RO 50 million expansion of Muscat Grand Mall to provide an additional 100 retail units in 30,000 m² of space and extend the existing cinema.
Retail mall supply 24 Proposed supply pipeline We would estimate that these four developments would deliver around 300,000 m² if/when they are all built.
Retail mall trends 25 The supply pipeline will result in an increasingly saturated and congested market. Focus of development on large scale malls is resulting in a supply pipeline of very similar style retail malls. Addition of entertainment/leisure facilities is being used to help drive mall performance. Mid to high end international brands have generally not performed strongly and an international department store is yet to appear in Muscat. Value sector outlets perform well. Hypermarket anchors are the primary driver for footfalls.
MARKET GAPS & OPPORTUNITIES
Growing economy and population 27
Understanding the market 28
Mall design 29 Design for different reasons: Lifestyle Aspirations Modern living Destination and neighbourhood Mind set Experience
Tenant strategy & mix 30
Tenant strategy & mix 31
Neighbourhood retail 32
Neighbourhood retail 33 Al Marsa Retail Centre at The Wave
Neighbourhood retail 34 Al Marsa Retail Centre at The Wave
Outlet retail 35
Souk/leisure retail 36
Big box/power centre 37
box/power centre 38
ONCLUSIONS
nclusions 40 tives: rapidly developing sector with a growing consumer base ositive economic trends evelopment opportunities opening up development issues: omplex form of development needing real market nowledge and understanding ocus on the needs, desires and spending power of e target market put of retail experts is vital enant strategy and mix is key ro-active management needed