September 23, 2005

Middle East developer invests $4.1B in signature malls

DUBAI, United Arab Emirates

This fast-growing city is already saturated with dozens of gaudy shopping malls, so a top developer said Wednesday he was branching out elsewhere, announcing plans to build at least 100 malls across the Middle East and the Indian subcontinent.

Arab countries, India and Pakistan are sorely underserved by malls, contended Mohammed Alabbar, chairman of Dubai-based Emaar Properties, widely considered the Middle East’s largest developer.

“People are increasingly looking for a fantastic shopping experience rivalling that of developed countries,” he said in a prepared statement. “We aim to create this for them.”

The firm will invest $4.1 billion US over five years to spread its signature shopping centres across India, Saudi Arabia, Egypt, Algeria, Morocco, Jordan, Syria, Pakistan and the UAE, Alabbar said.

The developer is convinced that rising incomes in parts of the Middle East and South Asia have created a wider segment of the population with disposable income and a desire for better lifestyle, particularly in India where half the new malls will be built, he said.

But it’s not just rising demand that is fuelling the expansion. Gulf states like the Emirates are full of investors reaping record oil profits who are looking for real estate projects to soak up their excess cash.

“There is a wave of liquidity in the Gulf which is rippling out across the region, as the beneficiaries of the oil boom look for new and undervalued markets to put their money in,” said Richard Thompson, the London-based managing editor of Middle East Economic Digest.

Crown Prince Sheik Mohammed bin Rashid Al Maktoum, considered the intellectual architect behind Dubai’s ongoing building boom, called Dubai’s thronged malls “an iconic symbol of what we could share and replicate here and elsewhere, starting first with the Gulf and South Asian regions.”

Emaar’s first phase is for 100 malls, but Alabbar said the firm may build as many as 200. He contended the region could support more than 400.

He said studies show the Middle East and North Africa count less than two square feet of retail space per inhabitant, versus 17 square feet per capita in the United States. India has less than one square foot.

Critics of the rapid pace of development have said Emaar and other developers have focused on speed at the expense of quality. Many luxurious condominiums and townhouses here develop cracked facades and broken fixtures just months after they are finished.

Emaar is setting up a subsidiary, Emaar Malls, to handle the mall project.

Associated Press

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