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Giant new mall alters Bahrain retail balance
Could oversupply threaten the future of Bahrain’s retail sector?
August 11, 2008 9:13 by kippreport
If all goes according to plan, Bahrain’s retail sector will witness a landmark event on 1st September this year, as the Bahrain City Centre mall finally opens its doors. Developed by Dubai’s Majid Al Futtaim Group (MAF), the latest in a series of ‘City Centre’ retail concepts spanning Egypt to Oman, the complex will dwarf the existing malls in the kingdom. At about 140,000 square metres of leasable space, it will be just over double that of the current flagship retail offering of Seef Mall – said to be the country’s most-visited leisure destination.
There can be no doubt that Bahrain City Centre will draw the crowds: while both Seef Mall and Dana Mall are attached to multiplex cinemas and offer children’s play areas, the new offering – estimated to have cost some $350-400 million and built by a team of the local Cebarco and Malaysia’s WCT – will be on a different scale entirely.
Befitting the developer’s Dubai roots, various ‘records’ will be set: the complex will include the region’s largest indoor waterpark and – at 20 screens – the largest multiplex. It will be home to more than 300 stores – including Bahrain’s first Carrefour hypermarket – a Magic Planet family entertainment centre, and two luxury hotels managed by internationally-renowned Geneva-based operator Kempinski, offering a total of some 700 rooms. Indeed, as the MAF marketing material describes it, City Centre is less a mall than a “leisure and shopping resort”.
City Centre is not the only new shoppers’ paradise in the pipeline. The 16,500-square metre MODA Mall, carved out of the refurbished Bahrain Commercial Complex linked to the Sheraton Hotel and an extension through the ground floor of the newly-built neighbouring Bahrain World Trade Centre, is close to completion.
In 2007, Seef Mall completed an estimated $40 million expansion of its west wing to increase capacity by almost a third. And while the ubiquitous malls included as part of the massive self-contained tourist resorts such as Amwaj Islands off the coast of Muharraq or Durrat al-Bahrain at the southern tip of the main island are likely to be too far off the beaten track to be in competition with those in and around Manama, many of the developments rising out of the sea off the north shore of the capital encompass substantial retail facilities: Lulu Island, for example, will include a mall.
In spite of the apparent potential for a glut, few analysts foresee such a scenario. Indeed, in one sense they have been positively betting against it. The government sold off its 48.5% stake in Seef Properties – owner of Seef Mall in addition to numerous other lower-profile retail businesses – through an initial public offering in mid-2007, with shares priced at BD 0.110-0.125: the offering was oversubscribed 3.5 times and in early June 2008 shares were changing hands for just under double the sale price – and this despite both primary and secondary traders knowing about the MAF plans throughout the process.
Part of the confidence can be attributed to differentiation: MODA Mall, for example, is pitched squarely at the highest-end, wealthiest customers: tenants include Louis Vuitton, Versace and De Beers, while the anchor store is Villa Moda, brainchild in 1991 of Kuwait’s ‘sheikh of chic’ Sheikh Majed al-Sabah. Others, meanwhile, are more functionally designed for the less well-off shopper – such as Marina Mall and Isa Town Mall.
However, even for those bunched in the middle and apparently offering a similar proposition, the prospects appear healthy as long as prevailing economic conditions are sustained. Bahrain and more importantly Saudi Arabia, from where some 80% of visitors regularly arrive across the King Fahd causeway, are both experiencing rapid population growth and have large youthful populations of the type most likely to be seduced by the mall experience than their forebears. The middle class is growing and the economic boom is creating increasing quantities of disposable income.
And the hope is that tourist numbers will increase strongly in the coming years, with development of the sector one of the key planks of the government’s economic development strategy. While naturally welcoming the spending power of many of the weekending Saudis, the kingdom is trying hard to market itself as a hub for family tourists, chiefly hailing from other countries in the region – a market for which a wide array of malls with complementary attractions such as children’s theme parks would be an obvious draw.
Similarly, as the other main push on the traveller side is to become a regional centre for MICE and other business events, amusements for accompanying families could evidently strengthen the case. Finally, while it remains some years off, the construction contracts for the long-awaited Qatar-Bahrain causeway were signed in early May. The link will cut the journey time between the two states from some five hours to 30 minutes and Bahrain in particular is expected to benefit from an influx of leisure visitors from Qatar eager to enjoy the more liberal atmosphere prevailing in the kingdom. For those whose penchant is for shopping, they can be assured of a wealth of supply.
First seen at www.gmr-online.com