Middle Eastern Cities Wooing Global Retail Brands
The business and tourism hubs of the Middle East are fast becoming magnet cities for big brands, with five – Dubai, Kuwait City, Abu Dhabi, Jeddah, and Riyadh – identified as global ‘growth cities’ in JLL’s Destination Retail report.
Behind their dynamism lie all the right ingredients for growth. A growing flow of foreign money from tourism has found its way into the tills of brands who have been lured by the large quantities of affordable retail space and franchise structures – which cut operational risk when entering the market.
This, combined with limited competition from domestic brands, a rapidly rising middle class and increasing urbanization has created a cluster of retail growth hot spots.
When it comes to international retailer presence, Dubai is already ranked fourth among the world’s cities. And it’s the top retail destination in the Middle East.
Large quantities of affordable retail space have enabled international retailers, supported by franchise operators, to open up stores. And the future looks particularly strong, not least because the government is promoting tourism to increase the flow of foreign money.
Already home to dozens of malls, a significant number of major new shopping projects are due to complete over the next two years. Dubai is also set to become home to Mall of the World. Plans include a temperature-controlled retail-street network spread over 7km, as well as residential, office, hospitality, and entertainment provision.
In addition, Dubai will host World Expo in 2020. Recent entrants to the market include Apple and Charming Charlie.
Abu Dhabi is transforming itself into a global retail hotspot, helped by city’s retail-driven tourism policy, which has brought wealthy foreign visitors, prompted new mall developments, and attracted luxury brands.
It’s a trend that’s set to continue. A large retail center called The District is planned to be built alongside the development of tourist attractions Zayed National Museum, Louvre Abu Dhabi and Guggenheim Abu Dhabi on Saadiyat Island.
Meanwhile, US department stores Macy’s and Bloomingdale’s have both announced plans to open in Al Maryah Central, a planned extension of the existing The Galleria shopping scheme. Other notable large retail developments on the horizon include Reem Mall and Marina Mall Extension.
Retail sales are forecast to rise almost five per cent a year until 2020, driven by ongoing urbanization and a growing expat workforce. Upscale fashion products are expected do especially well, boosted by a young population and the city’s relatively relaxed dress codes.
With its choice of high-end malls, Kuwait City is already attractive to international retailers. Its Avenues Mall, with 800 stores, is one of the world’s largest shopping centers and home to Chanel, Burberry, Louis Vuitton and Prada.
The Gate Mall near the American University of Kuwait is the latest scheme to open, featuring brands such as H&M, MAC Cosmetics and Bimba Y Lola, as well as Debenhams department store.
Local shoppers have always been the key driver for retail sales in this strong commercial hub. But now the government is targeting two other markets: business travelers and the thousands of pilgrims who use this city as the gateway to Mecca and Medina.
To improve the pilgrims’ experience of Jeddah, there’s been investment in major urban regeneration projects and the transport system. And an extra 58,000 square metres of high quality retail space will become available in 2016 with the opening of the Al Yasmin Mall, north east of Jeddah.
Meanwhile, ongoing refurbishments of some of the older shopping centers has prompted brands such as MAC Cosmetics, Gucci and UK department store chain Debenhams to expand their network. And Prada has entered the market with a standalone boutique in new high-end Boulevard shopping center.
Saudi Arabia’s capital city, Riyadh, is the country’s political, financial and administrative heart. In retail terms, its sales are projected to grow over seven per cent annually until 2020.
The government’s decision to allow retail businesses to be 100 per cent foreign-owned is expected to increase demand for space from international retailers and push up rents.
Two of the most recent retail schemes that have opened are Robeen Plaza and The Boulevard. Meanwhile the Kingdom Centre, Al Faisaliah Mall and the newly developed Al Nakheel Mall are among the major shopping centers featuring international brands. Calvin Klein, Virgin Megastore and Bose are among the city’s latest entrants.
To learn more about JLL’s City Momentum Index, please visit JLL’s Cities Research Center.