successful retail schemes seen in the UAE’. Colliers says by using this type of format, developers are targeting a ‘diverse tenant mix and strong level of footfall, which necessitates the provision of increased food and entertainment.’ Colliers also notes the market share of branded clothing has been
increasing steadily over the past decade due to ‘changes in consumer tastes and converging global fashion trends.’ According to CB Richard Ellis’ How Global is the Business of Retail? report, Jeddah’s retail industry has enjoyed significant attention over the past few years and the report states that the Kingdom as a whole is now attracting 43% of all international retail brands surveyed and had overtaken better known retail destinations like Hong Kong, Russia and Japan. Researchers at Colliers note that Saudi consumers ‘have become
increasingly sophisticated, demonstrating brand awareness and brand loyalty.’ As such, outlets now range from exclusive boutiques, top international designer labels to established local trade stalls.
PERFORMANCE According to JLLS, average rents vary between SAR 1,800 and SAR 2,500 per sq m for unit stores in major malls such as Red Sea Mall, Mall of Arabia, Aziz Mall, Andalus and Stars Avenue. Rents for anchor tenants are lower, averaging between SAR 600 and SAR 1,500 sq m. Average rents for street retail vary between SAR 1,000 for secondary locations up to SAR 4,000 per sq m for prime locations in Tahlia Street, Rawdah, Malak Road and Amir Sultan. Prices for food outlets vary between SAR 2,000 up to SAR 4,000 per sq m in malls and between SAR 1,200 to SAR 3,000 on major streets. Tere was no general increase in retail rents in the Jeddah market during 2009 and early 2010. Performance has been constrained by sluggish consumer spending and increased retail supply in new locations. Older centres have suffered from the introduction of large new malls and have to offer rent concessions or holidays to retain existing tenants. In some cases, tenants have still left existing centres (e.g. Carrefour who decided to leave the Jamjoom Centre).
WHAT DOES THE FUTURE HOLD? Colliers say Jeddah’s shopping mall stock is expected to grow by
over 689,000 m2 GLA by 2017, with a sizeable proportion of supply expected to enter the market this year. The report says: “Competition is expected to accelerate as more supply is delivered, which will force landlords to adjust their rents accordingly to maintain high occupancy rates. Increased competition may also result in the construction of better quality shopping malls with enhanced leisure activities as landlords compete for tenants. “Te rejuvenation of existing malls will help bring about a better quality
of development. It is thought that this situation will promote an increase in quality and strength of management of malls.” Te CBRE report says: “A lack of high quality retail space has deterred
international brands from entering KSA, but the opening of several new, Dubai-style shopping malls, such as Jeddah’s Mall of Arabia, should present more opportunities. UK retailer Alliance Boots opened there through MH Alshaya and retailers such as H&M, Debenhams, Foot Locker, Mothercare, Starbucks and Topshop are all present in the market.” JLLS states there has been a ‘clear shift of tenant interest’ toward the
large new malls such as Mall of Arabia, Red Sea Mall, and Andalus Mall. Street retailing does however remain in demand, especially the street facing units beneath office buildings like Jameel Square, where space fronting Tahlia Street has been taken by Van Cleef & Arpels, Chanel, Piaget and Fauchon. Te largest lease within a retail mall was at the Shemeisy Centre where Options Furniture has taken a 5,000 sq m outlet. According to JLLS the retail market ‘still needs some time to absorb the
recent shopping centres and further declines are expected in average rents over the short term.’ Te pace of decline is however stabilising compared to the slump of the last 12 months. “With supply limited largely to retail components of high-end mixed- use projects introduced as developers try to make sense of high land values and densities in strategic locations, the Jeddah retail market has the opportunity to pause for breath and respond to increasing confidence and retail sales over the next 12 months” l
JUNE 2011 I CITYSCAPE I 13
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