The planned development of several mega malls in Oman poses an important question on whether the Sultanate’s projected growth in retail demand justifies such huge investments, especially by regional players.
QUICK GLANCE
A significant volume of new retail space is set to enter the market over the next five years.
Majid Al Futtaim Properties is investing RO180 million to build the country’s biggest mall in Muscat.
Avenue Mall at Bausher opened early this year offers a total leasable area of 80,000 square meters with more than 205 retail outlets.
Muscat Grand Mall (MGM) that opened in 2012 has started work on its second phase expansion.
The retail supply at the Wave is also set to grow from the current 1,500 square metres to over 12,000 square metres, with the development of Marsa Village Retail Centre.
Several major regional retail chains have entered Oman with their huge investment plans, which are in different stages of planning and implementation. Since the neighbouring United Arab Emirates is more or less saturated, the major chains are looking at countries like Oman to expand their malls and hypermarket network. The vast area and scattered population, especially in interior towns, also offers an opportunity for these business houses to invest in Oman.
However, the major question is whether these groups will be able to attract enough customers to make their investments viable. Also, what would be the impact of sluggish oil price on the retail sector in view of slowdown in government spending and projected economic growth.
With a freeze on government appointments this year amid dwindling government revenues, there could be a slowdown in demand for retail products. Also, the austerity measures of both public and private sectors are expected to affect the retail sector, at least for a short period. After the grand opening of Avenue Mall, Palm Mall, Panorama Mall, Mall of Oman, My City Centre Mall, Muscat Grand Mall second phase and Marsa Village Retail Space are taking shape in different parts of the country. In addition to these mega malls, new supermarkets, hypermarkets and department stores will also add retail space. A significant volume of new retail space is set to enter the market over the next five years, across a mix of both mall-based and master plan developments. For instance, Palm Mall Muscat, which is already under construction in Mabela, is scheduled to be completed by end of 2016. As a vast retail destination, it will give the Sultanate’s shoppers a taste of what is already on offer in well developed regional markets. Also, the mall plans to build an adjoining 4-star hotel and suits, which will be managed by Dusit Group. The hotel project will include 150 luxurious guest rooms and 100 private suites. The project provides a unique destination in Muscat that will offer this top quality hotel along with other attractions including aquarium, snow city, and a shopping mall. Panorama Mall in Al Ghubra will also help to change the face of Oman’s retail landscape.
The Mall of Oman, which is the biggest in the country, is about to reach construction phase. Majid Al Futtaim Properties, a leading business house in the Gulf region, is investing RO180 million to build the country’s biggest mall in Muscat as part of its ambitious plans to expand in the region. Oman’s new shopping and entertainment destination is expected to generate 1,500 jobs for its construction and a further 3,500 jobs once opened and will enhance the Sultanate’s retail and entertainment offering for both residents and tourists. Construction of the mall on a 157,000 square-meter land, which will house 350 stores, is expected to be ready in the fourth quarter of 2017.
The UAE-based retail chain also plans to build another mall – My City Centre Sur – which will add 16,000 square meters of gross leasable area to the country’s burgeoning retail sector. Anticipated to open in the first half of 2017, the estimated investment for the project is RO12 million. The mall in Sur is the third major venture of the UAE group, after developing City Centre Muscat and City Centre Qurum. Tailored to suit the individual needs of residents, My City Centre Sur acts as a social hub for the immediate community, housing 50 retail outlets, including a Carrefour hypermarket as well as a significant mix of leading brands and casual dining options. The whole idea is to tap the market in interior regions. The new mall is located on Sur’s main commercial road, and is set to be a key destination for both residents and the growing number of tourists visiting this coastal city famed for its dhow shipyards, and nearby beaches and wadis.
The community mall, My City Centre Sur will be a great added value to the surrounding communities and offer an exceptional array of shopping, fashion and dining options. Major factors influencing the retail growth in Oman include economic growth, purchasing power, growing population comprising a large proportion of expatriates, changing consumption patterns and increasing penetration of international retail players. The retail industry in the Gulf Cooperation Council (GCC) is expected to maintain a positive momentum, driven by the social and economic developments. GCC retail sales are expected to grow at a 7.3 per cent compound annual growth rate (CAGR) between 2013 and 2018 to reach $284.5 billion, according to Alpen Capital.
Of late, there have been changes in the consumer needs and behaviour where the focus has shifted to higher quality professional products. This change in the demand brings in valuable opportunities for the current large retails. The Lulu Hypermarket, which opened its Avenue Mall at Bausher early this year, offers a total leasable area of 80,000 square meters with more than 205 retail outlets. The five -storeyed mall, which can accommodate more than 200 brands under one roof, is home to a mix of local, high-street and posh international brands. The mall, which anticipated around 40,000 to 50,00 people every day, also has around 3,400 parking bays divided equally between the basement and the surface parking to help shoppers.
A symbiotic blend catering to the needs of shopping enthusiasts on the one hand and entertainment seekers on the other, the mall showcases an array of new as well as prominent brands from across the world. A large food court with popular names serving cuisine from all over the world, to a well-equipped play area for the comfort of children, the mall has amenities to suit the needs of all shoppers and also includes the existing 20,000-square metre Lulu hypermarket for all the daily needs.
Muscat Grand Mall (MGM), the first major mall that was opened in 2012, has started work on its second phase expansion – a positive reflection of retail performance. The Tilal Complex, which houses MGM along with other residential units, is planning to add 80 per cent more space to its existing facility at Bausher, taking the total area to 250,000 square meters of space from 140,000 square meters now. Since the work has reached an advanced stage, the whole project is expected to be ready within a year or so.
The retail supply at the Wave is also set to grow from the current 1,500 square metres to over 12,000 square metres, with the development of Marsa Village Retail Centre, which will offer 10,850 square metres of retail and commercial space for lease.