PRINT THIS STORY:

CHANGE TEXT SIZE:

FROM SOUKS TO CENTERS

Retail boom hits Sharjah, U.A.E., with three malls under construction

By Barbara Hogan Galvin

The 80-store Souk Al Majarrah, above, is a modern structure built in the traditional Islamic style. Souk Al Arsah, below, one of the city’s oldest, is constructed out of coral stone shells.

A quick glance across the sandy horizon reveals that the City of Sharjah, United Arab Emirates is booming. Nearly 40 construction cranes gleam in the sun, marking sites where new residential, business and retail structures will soon stand.

The flurry of development activity, fueled by a strong economy and an increase in international tourism, includes the creation of three shopping centers — all of which are scheduled to open this year — and the doubling in size of another mall that opened its doors just a year ago.

Sharjah, one of a group of seven sheikdoms, or emirates, that make up the federation of the United Arab Emirates, has always lived in the shadow of Dubai, its international, cosmopolitan and vibrant neighbor. But today, Sharjah is reaping some overflow benefits from the larger, expanding Dubai, and compounding them with the opportunities enjoyed by a suburb.

“To look out and see what, just two or three years ago, was just sand — it’s absolutely phenomenal,” said Alistair Parker, head of shopping center development at London’s Healey & Baker property firm, and international leasing agent for Sahara Centre, a 1 million-square-foot mall under construction here. “The Gulf market is capable of going from zero to 60 in seconds flat.”

However, developers, retailers and shoppers in Sharjah are not interested in creating a carbon copy of Dubai City. Instead they are developing a style of their own by adopting what they like from its malls, and blending it with Arab traditions and retail heritage.

The emirate’s shopping history plays a significant part in its modern-day boom. The number of tourists visiting Sharjah, especially from Europe, has increased dramatically in the past five years with visitors seeking an “authentic Middle Eastern experience,” said Barry J. Jennings, senior consultant for the Sharjah Commerce and Tourism Development Authority. Dotted throughout Sharjah are many traditional souks, or bazaars, where local merchants sell handmade clothing, jewelry, antiques and textiles. Some of these markets, such as the 22-year-old Sharjah Central Souk, an elaborate enclosed structure in the Arab style housing hundreds of merchants, attract throngs of tourists, said Jennings, who also is spokesman for the Al Taawun Mall. “Shopping has always been a strong part of visitors’ holiday here, a way to broaden the experience of their trip,” he said.

In addition to a growing tourism market, Sharjah’s local population also has grown over the last few years and, without local malls, residents have been forced to drive 20 minutes to Dubai’s indoor centers or shop the main streets and souks.

“There was an opportunity to address the neglected, underserved local portion of the trade area,” Jennings said. Sharjah currently has a population of about 600,000, and predictions are that it will jump to 1.6 million in 10 years, he said.

This lucrative market prompted the development last year of the Al Taawun Mall, a three story, 425,000-square-foot center developed by the Sharjah government in partnership with Islamic Development Bank, Jedda.

Western-style mall development firms are not common here. Typically, the developer is the family that owns the property on which the center is built. The owners will then typically hire a leasing and management team to run the property.

The Al Taawun Mall features a mix of 70 tenants and a food court.

The Al Taawun Mall, designed in the style of an ancient Islamic fortress, contains a mix of 70 tenants, including Mothercare, Next, Guess and a selection of local merchants. It also has a food court that includes a McDonald’s, Baskin Robbins, Kentucky Fried Chicken and a Pizza Hut, and a 54,000-square-foot family entertainment center anchor called Foton Edutainment.

The center got off to a rocky start last year, mainly due to inadequate management, Jennings said, and the center is still only 75% occupied. Nevertheless, a new management team is forging ahead with an aggressive expansion that will more than double the size of the mall by 2002. The catalyst is the signing of Géant, a France-based hypermarket tenant, the chain’s first site in the United Arab Emirates. Another French chain, Carrefour, currently has a monopoly on hypermarkets in the Emirates.

The 200,000-square-foot Géant will be the largest hypermarket in the federation, and is predicted to significantly boost Al Taawun’s foot traffic, Jennings said. Currently about 9,000 to 12,000 shoppers come daily, he said, but the hypermarket is expected to boost that to 20,000 people per day. In turn, the extra traffic is expected to attract some more prominent retailers to the mall; about 80 additional small shops are part of the expansion plan.

The hypermarket anchor will not only differentiate Al Taawun Mall from the new competitors coming into the market, it will provide a one-stop shopping destination. This is especially critical, given that people often are subjected to summertime temperatures exceeding 120 degrees Fahrenheit, and don’t want to be stepping out of the air-conditioning any more than they have to.

Souk Al Madina
The expanded Al Taawun Mall will be competing for food shoppers with Souk Al Madina, a Carrefour-anchored 300,000-square-foot community center under development by Majid Al Futtaim Investments, Dubai. Phil McArthur, vice president of leasing and marketing for the development company, said he is keenly aware of looming competition from Al Taawun’s hypermarket, but he exuded confidence nevertheless.

“Carrefour is the most powerful shopping center retailer you can have in this region,” said McArthur, a past president of the Middle East Council of Shopping Centers. “It’s the locomotive that drives the train.”

Al Madina will also include about 85 small-shop tenants, comprising a mixture of international retailers and local gold and textile merchants, service tenants such as an optician and dry cleaner, six kiosk merchants and a food court offering Western and Eastern food. The center is more than 85% pre-leased and is scheduled to open in August.

The largest of Sharjah’s planned malls, Sahara Centre, is scheduled to open this fall with 170 small shops, a 12-screen multiplex cinema, a 10-vendor food court, and Adventure City, an 80,000-square-foot indoor amusement park.

Healey & Baker has set detailed shop-fitting guides for tenants in order to maintain international standards, and has established a leasing plan grouped around themes, such as fashion and entertainment. A lack of planning means that “some retail [projects] here resemble souks in organization and layout,” said Parker, the center’s international leasing agent.

Sahara Centre, the largest of Sharjah’s planned malls, is set to open this fall.

His firm’s leasing strategy calls for a tenant mix of about 40% local operators and 60% international merchants. The collection of international brands found in the region is more extensive than “in any other market in the world,” according to Parker, due to the area’s wealth, international status and an overwhelming brand consciousness among its shoppers, he said.

Leading global chains such as Warner Bros. Studio Store, Zara, Liz Claiborne, Next, Marks & Spencer, Starbucks, Kookai and Alfred Dunhill are prominent in the region, and are on the A-list among leasing agents handling Sharjah’s new centers, McArthur said.

However, federation-wide laws mandate that all retailers must be run by local operators, so each is structured as a franchise.

Even if chains do not allow franchises anywhere else in the world, many do so here in order to enter the lucrative Emirates market, Jennings noted.

A significant number of these top retail franchises are controlled by a handful of companies in the Middle East.

“About 11 primary companies can deploy about 130 top brands. You could realistically lease a mall in its entirety with five companies,” Parker said. For example, Al Shaya, based in Kuwait, operates the franchises for The Body Shop, British specialty anchor Debenhams, Starbucks, Top Shop and French retail chain Etam.

The retail environment in Dubai is so fertile that many international chains pilot new concepts here before rolling them out to other parts of the world, Parker said, adding that they could in the future do the same thing in Sharjah.

Conversely, retailers that have saturated their North American and European markets often turn to this region to continue expansion, McArthur said.

Leisure tenants have done the same thing. Multiplex cinemas, huge arcades and even ice skating rinks have blossomed in malls in recent years, specifically targeting the large number of young families in the region. More than half the population of the Emirates is under the age of 30, with a common local household of five to seven people, according to research data from Healey & Baker.

“Entertaining children is a key part of any retail offer,” Parker said. Leading multiplex cinema chains in Sharjah and Dubai include South African operator Ster Century and Australian operator Great Union.

The malls in Dubai and Sharjah are as modern as any in the West, but they also accommodate tradition: They are typically open from about 10 a.m. until 10 p.m., but like other businesses across the Middle East, some shops close from about 1 p.m. until 4 p.m.

 

© 2008 ICSC. All rights reserved. | Terms and Conditions | Privacy Policy | Contact ICSC | ICSC Home |