RETAILINTERNATIONAL

Founded 1993. The original independent MENA retail consultants.

Volume 19 Edition 1 2011

THE ANNUAL REPORT 2011

Tel: +44 (0) 1580 860870
info@retailintern ational.co.uk
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The Annual Report 2011

Covering the GCC countries, The Levant and North Africa the report is based on the same extensive research as previous years of over 300 shopping centres across MENA.

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Copyright 2011 Retail International. All Rights Reserved. No reproduction without prior permission.

RETAILINTERNATIONAL
The Annual Report 2011
Tel: +44 (0) 1580 860870
info@retailinter national.co.uk

Founded 1993. The original independent MENA retail consultants.

Overview at Q3
The Arab Spring
If there was any likelihood of the build it and they will come syndrome reappearing with improving economic conditions following the 2007/2008 sub-prime crisis, this was truly laid to rest on 3rd March 2011.This was the day when a 26 year old street vendor from the small Tunisian town of Monastir set himself ablaze in protest at the bureaucratic hindrance in his work. Few then could have predicted, like the blaze itself, that this single act would be the spark of a revolution that in weeks would have engulfed much of North Africa, parts of the Levant and the Arabian Gulf. Even fewer would venture to assess the outcome in 2012 of what has now become known as The Arab Spring, while so much unnished business remains in the likes of Yemen, Libya, Egypt and their neighbours.

Volume 19 Edition 1 2011

The Euro Factor

Set against the OECD reporting economic recovery coming close to a halt in the major industrialized economies, with falling household and business condence affecting both world trade and employment, Greece bankrupt and the Euro Zone in turmoil not to mention uncertainty as to the outcome of the US Presidential Elections in 2012, the international political and nancial climates are now major issues to be confronted by any prospective mall developer in the MENA region. Where once demographics coupled with demand and supply were the major considerations for those who bothered with such matters, the prospect of gathering international storm clouds can not now be shrugged off quite so lightly on the basis of build it and they will come where the they are tourists and other punters from the west.

Consumer Condence at Record High

Despite the ravages of recession, uprisings and war there are signs of better times to come. In August consumer condence in the UAE was reported to be at a record high. In its survey of 25 markets, the MasterCard Worldwide Index of Consumer Condence posted the countrys strongest showing ever in the retail, travel and hospitality sectors. Respondents to the survey across the Middle East were said to be equally bullish about the health of business sectors within their markets.

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RETAIL INTERNATIONAL THE ANNUAL REPORT 2011

GCC Qatar & UAE

Qatar
Doha 825,000 sq.m completed Qatar, thrust to being a major economic power in a matter of years with seemingly bottomless pockets is ploughing on with a development programme geared to staging the 2022 FIFA World Cup and bid to host the 2020 Olympic Games. Apart from the stadiums themselves and major infrastructure, shopping is set to be a major component, expanding existing supply of mall GLA to some 1,457,000 sq.m by 2020. Vying for mall supremacy in Qatar is Doha Festival City a mega project costing some $1.37bn due for completion in 2014. Other runners are likely to be the retail component of Msheireb Properties $5.5bn transformation of 31 hectares in the centre of Doha, Lusail City, Ezdan Mall in Al Gharafa, and Al Meera Holdings plans to build two new malls in Doha. In November Barwa revealed it had signed with retail giant Chinese Dragon Mart at Barwa Avenue to open in Q1 2012. This will be the second such facility in the Gulf following the rst in Dubai.

AbuDhabi 870,000 sq.m completed

Abu Dhabi
In Abu Dhabi, Aldar Properties, following a reported $5.2bn bailout from the government in January 2011 and a return to prot after the sale of assets, announced in October the signing of the main construction contract for Yas Mall a 235,000 sq.m mega mall due for completion in 2013. This and other projects such as the 2010 completed 147,000 sq.m GLA Dalma Mall in Mussafah, Mushrif Mall 56,000 sq.m by year end 2011, and others in the pipeline, will bring the projected supply of GLA to some 2 to 2.5 million sq.m by 2015.

Dubai
Dubai 2.9m sq.m completed Meanwhile, as if heeding calls from leading retailers that it cannot sustain any more mega-malls, development in Dubai has slowed markedly with new activity concentrated on community malls and mall upgrades. Notably the latter includes a $55.4million expansion of Al Ghurair City, one of Dubais oldest shopping malls with the addition 150 new outlets bolstering its size by more than 12,000 sq.m. Likewise BurJuman announced plans to remodel the mall to enhance facilities and increase footage by some 20,000 sq.m over 18-24 months. Total mall GLA stock is likely to touch 3 million sq.m within the next few years. The upward swing in footage is only likely to recommence with the opening of Phoenix Mart mall a massive new project covering some 800,000 sq.m next to the existing Dragon Mart on the outskirts of the city. Said to be three times the size of its neighbour, the Phoenix Mart will comprise 6,000 outlets and like Dragon Mart these will house brands mostly from China. The $550 million project investment will come from the Chinese government (70%) and the balance from China Longines. Not to be outdone, Nakheel owners of Dragon Mart announced plans to extend their mall by 170,000 sq.m and 5,000 additional parking spaces. Other than this niche activity many conventional projects remain stalled or even abandoned. The Ilyas and Mustafa Galadari group however still have plans for the much heralded and delayed Mall of Arabia mega-mall although the group is reported as saying the mall will now not open before the end of 2015. The 1st phase was due to comprise some 560,000 sq.m.

Fujairah 56,000 sq.m in the pipeline

Fujairah
Elsewhere in the UAE Majid Al Futtaim Properties are on course to open Fujairah City Centre in early 2012. With a GLA of 34,000 sq.m the $110 million project is being built in partnership with the Fujairah Investment Establishment. The retail stock in this small emirate is due to be enlarged further with the development of the Fujairah Business Centre, which will add some 22,000 sq.m of retail by 2013-14.

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RETAIL INTERNATIONAL THE ANNUAL REPORT 2011

GCC & Iran Bahrain, Oman, Kuwait, KSA & Iran

Bahrain
Bahrain 720,000 sq.m completed In Bahrain, Ramli Mall opened at the beginning of the year. Developed by EMKE and anchored by a LuLu hypermarket this centre brings an additional 80,000 sq.m supply to the Bahrain stock. In late August in the wake of political unrest resumption of the Capital Trade Centre (rst published in 2008) was announced. The 140,000 sq.m mixed-use development is designed to house the Manama Central Market and other retail outlets. With completion expected within six years the resurrection by the authorities of this project may have more to do with re-building Bahrains shattered international image than a need to meet retail demand in an already well supplied market likely to approach 900,000 sq.m GLA within two years.

Oman 346,000 sq.m completed

Oman
Omans supply will be signicantly increased over the coming months by several new projects including the 60,000sq.m Grand Mall and the 6,500 sq.m Royal Opera House Mall. Combined these will bring total projected supply to some 435,000 sq.m.

Kuwait
Kuwait 630,000 sq.m completed In Kuwait, a $500m extension to the nations largest mall, The Avenues, is set to open in 2012 bringing the enlarged centre to an estimated 250,000 sq.m to include a Harvey Nichols department store of 10,000 sq.m. There are ambitious plans to bring The Avenues GLA up to some 400,000 sq.m through the addition of further phases going forward according to Mabanee Company, the developer.

Saudi Arabia
Buoyed by retail sales expected to grow from just under $27bn this year to more than $37bn in 2015 on the back of strong economic growth, mall development in Saudi Arabia continues in-line with domestic needs, but with a number of large projects still on the back burner. Across the three major cities and conurbations plus the Holy Cities the total projected space stalled could amount to over 600,000 sq.m which, if resumed, could bring the total GLA for these centres within the next 3-5 years to some 6.5 million sq.m Bucking the trend, however, Dar Al Arkan Real Estate Development Co., Saudi Arabias largest developer by market value, is nearing completion with Al Qasr Mall in south Riyadh. Offering over 90,000 sq.m GLA plus a 10,000 sq.m ice-skating rink, the centre is possibly the largest coming to fruition in 2011/2012 in The Kingdom.

KSA 4.4m sq.m completed

Iran
Shiraz 2,500 units planned Across The Gulf, in Iran, UAE-based conglomerate Royal Star announced completion in June of its agship $830 million mall Fars Shopping Complex in Shiraz. The mall, claimed to be the largest in the world in terms of the number of shops in a single complex, by offering 2,500 retail premises may be more souk than conventional mall but nevertheless is anchored by a 14,000 sq.m Carrefour hypermarket and in 2012 by a ve star hotel, the Burj Fars.

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RETAIL INTERNATIONAL THE ANNUAL REPORT 2011

North Africa Egypt

Beyond The Gulf, in North Africa and the Levant, 2011 commenced on an upward swing with developers planning, commencing or constructing new malls and extensions from Lebanon to Libya and most nations in between and beyond. In the wake of the civil unrest in the Spring, several centres in Tunis and Cairo suffered damage and even torched. Cairo 620,000 sq.m completed

Egypt
In Egypt, and Cairo in particular, the market at the start of 2011, looked to be especially active. Mall of Arabia a super regional mall of some 180,000sq.m located in Sixth October City opened its doors to the 1st phase. Nearby the high end Designopolis was already trading and a second phase imminent. Still in the west of the city MAF Shopping Centres were reported to be nalizing plans for the Mall of Egypt, a 160,000 sq.m clone of the Mall of the Emirates, Dubai scheduled to open in 2014. Dandy Mega Mall one of the rst malls in Cairo, had completed enlargement to 90,000 sq.m and signed up Marks & Spencer in the process. In all West Cairo was on target to achieve the 1-million sq.m mark of GLA by 2020. This situation was being mirrored in East Cairo with a similar potential GLA over ten years. Al Futtaim Groups Cairo Festival City in New Cairo leads the pack. A 160,000 sq.m mega mall along the lines of its sibling, Dubai Festival City. Anchored by their own in-house brands such as IKEA and Marks & Spencer, Al Futtaim surprised the market by signing up Carrefour as the hypermarket anchor from its family rival Majid Al Futtaim. The latters Maadi City Centre suffered severe damage in the unrest and remained closed for two months after a reported $34million of damage. Following the uprising and change of government, a number of developers especially from outside Egypt are taking stock of the situation or have even cancelled projects. Thus some rowing back from the potential 2 million sq.m. GLA for Greater Cairo by 2020 will be required, unless restarts or substitutions are made to redress the balance. In June Majid Al Futtaim Holding was reported as vowing to push on with its Egypt expansion in the wake of talks with the new government, only to reveal in September it had slowed the pace of investment in Egypt.

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RETAIL INTERNATIONAL THE ANNUAL REPORT 2011

LEVANT Syria, Lebanon, Jordan

Syria
Damascus

100,000 sq.m completed

A number of countries have of course been free from revolution although there is signicant unrest in Syria. Considered by many to offer long term potential a number of major mixed use and shopping centre schemes have been slated for Damascus and Aleppo. Setting the pace Majid Al Futtaim Holding which, despite the political turmoil, in August announced it had begun work on its $1bn mixed-use development located at Sabboura, 17km west of Damascus. The project will include the largest shopping mall in the Levant, Khams Shamat Mall with more than 200,000 sq.m GLA. Come September the media reported that development activity had been curtailed in the country this year. Others are sure to follow what MAF does over the coming months. Supply therefore in the two main cities seems likely to remain static at around 100,000 sq.m for the coming year.

Beirut 530,000 by sq.m 2013

Lebanon
Lebanon mostly free from unrest is beginning to suffer due to the severe lack of tourists due to the ongoing situation in Syria. In Beirut, the arrival in 2012 of MAFs Beirut City Centre is awaited with a mix of considerable anticipation tinged with uncertainty. Located in Hazmieh the mall will offer a GLA of 60,000 sq.m. This will bring the total supply in Greater Beirut to some 530,000 sq.m GLA. The MAF shopping mall links in with Waterfront City the agship project to line the Joseph Khoury Marina launched in July 2011.

Amman 310,000 sq.m by 2013

Jordan
Jordan, too, has remained relatively trouble free. Taj Mall the latest addition to Ammans retail stock with some 50,000 sq.m GLA and scheduled for opening in 2011 will bring the current and pipeline stock up to some 310,000 sq.m by y/e 2012.

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RETAIL INTERNATIONAL THE ANNUAL REPORT 2011

MAGHREB Libya, Tunisia & Morocco

Libya
Projects in Libya were hastily abandoned as some 700,000 expatriates ed the country and NATO bombing began. Tripoli 95,000 sq.m suspended Prior to the war, Turkish developer Turkmall had started construction in March 2010 of Forum OYIA in Tripoli and scheduled to open at the end of 2011. This was set to be Libya's first shopping and lifestyle centre with 95,000 sq.m GLA. Notwithstanding and six months on the scenario likely to emerge during the coming year is likely to be one of cautious optimism. Once the country is again peaceful, Libya offers the greatest potential with its latent wealth and shortage of up to date shopping centres.

Tunis 140,000 sq.m completed

Tunisia
In Tunisia, centres destroyed or severely damaged in the uprising will need replacing. Tunis City, owned by Groupe Mabrouk, with 55,000 sq.m GLA, anchored by Gant hypermarket, and the leading mall in the country, was looted and set ablaze. Six months on the centre has partially re-opened but only a third of the stores are up and running. With a new regime, greater market transparency may emerge thus attracting foreign investors and cross border brands back to the country, where once so many mega projects were planned by Gulf developers.

Souce: Life in Tunis

Casablanca 120,000 sq.m in the pipeline

Morocco
Morocco, also has remained stable but with little real major mall development activity. The opening of Morocco Mall under development in Casablanca with some 70,000 sq.m GLA and to be anchored by Galleries Lafayette was due to open in early 2011 but now appears to have been rescheduled. The government is supportive of large-scale retail and in February Mr. Bricolage the French DIY chain opened a 2,800 sq.m outlet in Tangier, its third in the country. As further evidence of this Sonae Sierra the major mall developer from Portugal, possibly due to the worsening home economy, announced in May that it was moving into Morocco. The Companys rst deal was signed with ONA Group and CDG group for services related to the development of a GLA 40,700 sq.m mall forming part of the Casablanca marina due to open at the end of 2013. The introduction to Morocco of a company of Sonae Sierras impressive track record might be a wake up call for others in this emerging market and, potentially elsewhere in the Maghreb - once normality is restored.

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RETAIL INTERNATIONAL THE ANNUAL REPORT 2011

Summary
GCC
GCC Completed 11.4 m sq.m In the pipeline 2.9 m sq.m

Wherever you may thinking of next, either as developer or retailer Retail International is ready to assist ....Simon Thomson

Since establishment in 1993 Retail International has completed assignments involving over 2,500,000 square m. GLA

RETAIL INTERNATIONAL
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Retail International is an independent retail consultancy owned by Simon Thomson offering specialist professional services to the retail industry. It was established in 1993.
Simon Thomson is an International Retail Consultant. Qualifying as a Fellow of the Royal Institution of Chartered Surveyors, London, he was invited to become a member of The Counselors of Real Estate, Chicago, in recognition of his international work on shopping centres. He is an active member of the International Council of Shopping Centers based in New York and was a founding director of The Middle East Council of Shopping Centres, Dubai, of which he continues to belong. Simon Thomson enjoys a distinguished career spanning more than 30 years in the international shopping centre and retail business having been and continuing to be involved with the development of leading shopping centres and the establishment of cross border retailers in Central Europe, the Middle East, Australia, USA, Western Europe.

Note: The views expressed in this document are those of Retail International and no liability can be accepted for any errors of fact or
opinion.
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