By Hadeel Al Sayegh
DUBAI- Mall operators in the Gulf region are delaying new mega-projects as the coronavirus pandemic and low oil prices upend a retail industry built around huge centres catering to tourists and wealthy locals.
Majid Al Futtaim (MAF), the Middle East’s biggest mall-operator, told Reuters it had delayed the launch of its fifth and largest centre in Oman, the 145,000 square-meter (1.5 million sq-ft) Mall of Oman, because retailers did not have the cash at hand to fit out stores.
In Dubai, Emaar Malls halted construction on two projects, according to two sources familiar with the plans. They are a mall near the site of the Expo 2020 world fair, which has been delayed by a year to next October, and a 185,000 square-met mall in the Dubai Hills residential area, the people said.
Emaar Malls, owner and operator of the world’s largest shopping centre, Dubai Mall, did not respond to a request for comment.
“In malls under construction, timelines are being revisited. This is a fluid situation,” MAF’s Chief Executive Alain Bejjani told Reuters. “We will see how it goes and adapt,” he added.
“It will be the case for the coming 12 months.”
Luxury malls, featuring international brands and entertainments such as dancing fountains and indoor ski slopes, have been the cornerstone of the oil-producing region’s retail industry, especially during the blistering summer months.
A growing population and steady stream of tourists has seen more projects planned in recent years even as competition has intensified and footfall has leveled off.
Last year, Alpen Capital forecast the Gulf retail sector to grow from $253 billion in 2018 to $308 billion in 2023.
The pandemic has changed the game in a matter of months, though.
Brick-and-mortar retailers have been among the worst hit by coronavirus closures. At Dubai’s Mall of the Emirates last week, several shop fronts were boarded up and rental dispute notices hung in some shop windows, a visitor said.
EFG Hermes forecast a 20 percent drop in Dubai store-based sales in 2020 if foreign visitors were allowed entry in the third quarter, and a 40 percent drop if travel bans remain until year-end.
MAF, which operates 27 malls across the Middle East, said retailers in the Gulf region were not expecting a meaningful recovery for the sector in the next 18-24 months. Foot traffic at its malls in the United Arab Emirates in May was less than half of what it was a year ago, it added.
“They are all in a tough spot. They’re focusing on liquidity issues,” Bejjani said.
He said the impact was being felt, from retailers to companies in their supply chain. Some of the firms will “throw in the towel” this year, he added.
Kuwait’s Alshaya Group, the Gulf’s largest franchise operator with brands including
Starbucks, Pottery Barn and The Cheesecake Factory, provided a grim outlook in April in an internal staff video seen by Reuters.
