For a share price, big is beautiful, but it can also be charming.
Mabanee, a property company listed in Kuwait, has one building, and that single asset is set to become the biggest of its kind in the Middle East.
Due to be completed in 2015, The Avenues, in Kuwait City, will surpass Dubai Mall as the largest shopping centre in the region and analysts say its growth will increase Mabanee's share price nicely in the near future.
The Avenues is being built in four stages, and work on the third phase is about to be completed. The overall project should be fully operational in four years, with total leasable retail area of 371,000 square metres.
"The Avenues enjoys first-mover advantage as the first mega mall in the country and currently has an occupancy rate of 98 per cent," said Global Investment House (GIH) when it initiated coverage on Mabanee this week.
The researcher says Mabanee also has the capacity to charge premium rents and maintain its existent tenant occupancy with a long list of retailers waiting to rent in the mall.
Being big has certainly helped Dubai Mall, which had 47 million visitors last year.
Phases one and two of The Avenues, comprising 426 stores over 166,000 sq metres, are reported to have average annual growth of 4 per cent in visitor numbers between 2009 and this year, and are now receiving a total of 498,000 visitors a week.
One of Dubai Mall's biggest tenants, Alshaya Group, a franchisee for major brands including H&M, Next, Starbucks and Debenhams, owns 36 per cent of Mabanee and occupies 20 per cent of the retail space in The Avenues.
"The strategic partnership with Alshaya Group provides Mabanee with an added tenant security through strong brand positioning and guaranteed placement," said GIH.
The researcher also said Mabanee's current share price of 0.83 Kuwaiti dinars had the potential for an 18 per cent increase.
But in the long term, a saturation of retail space is expected in Kuwait, similar to that in Dubai. This could weaken the occupancy rate in The Avenues. The mall is also dependent on the overall health of the Kuwaiti economy.
