DUBAI // With soaring commodity prices driving more property developers to incorporate retail components to maximise their return on investments, industry leaders who gathered at Cityscape Dubai this week stressed the importance of mixed-use developments. "Retail brings the lowest return of all the sectors; however, what happens is it is a catalyst for driving success within a precinct," said Graham Dreverman, the group managing director of Nakheel Retail. According to Al Mazaya Holding, construction costs in the GCC increased about 30 per cent last year and 50 per cent in the first half of this year. While the price of certain commodities and building materials have eased slightly in recent weeks, several challenges remain, including high transportation costs, supply shortages, the lack of contractors capable of delivering projects on time, and shortages of skilled labour. "All property developers are facing major challenges right now," said Jocelyn McBride, the group corporate communications and marketing manager for City of Arabia, where construction is under way on the colossal Mall of Arabia, set to become the biggest mall in the UAE when it is completed in 2010. "You've got rising world prices on commodities such as steel, concrete, glass - literally, the building bricks are costing more and more each day and that is endemic," she added. Worth about Dh367 billion (US$100bn), the retail sector serves as a major driving force behind the economies of the GCC and has become the second-largest non-oil industry in the region. Retail spending in the UAE alone is projected to reach Dh37.4bn a year by the end of the decade. "There should always be a good mix of commercial, residential and retail in any development," said Asher Schön, the vice president of Schön Properties. "Dubai is the ideal location in the world for the retail industry so it makes sense that this model would work so well." Developers insist that wherever you build malls, communities and tourists will follow. An evolution of culture and demographics, the population explosion and the increasing spending power of residents have contributed to the desirability of all-in-one developments. "The shopping centre has become the social hub," added Mr Dreverman. "There is a huge correlation between enclosed shopping malls and the growth of the economy during the summer period." Nearly all of the country's major developers have adopted the mixed-use model as the standard for new projects. Recently, Bani Yas Investment and Development launched an ambitious Dh2.2bn multi-use development set to house a 140,000 square metre shopping mall, with plans to eventually build a school, medical centre, a 20,000-seat sports stadium and a ballroom which residents can use for special occasions without charge. Officials with Dubai's new Sports City complex also followed suit, announcing a major retail component as part of the world's first integrated sports city. More than 353,000 million sqm of retail space are currently being built across the Dubailand complex, with the new Arena Mall to be linked directly to two of the multipurpose Sports City stadiums. Also last month, Dubai Properties Group officially opened The Walk in the Dubai Marina, located below the Jumeirah Beach Residences. Operated by Dubai Retail, a subsidiary of Dubai Properties Group, the 1.7-kilometre promenade features more than 170 different outlets with a total of 305 scheduled for completion in the coming year. "People are now looking for the complete set of values in terms of a place for their child to go to school, a place to do their shopping, a place where they can spend their leisure time," said Ms McBride. "The city is getting bigger, it's getting broader, it's getting busier and I think people increasingly want to do everything at one location." vsalama@thenational.ae
