Retail therapy for Abu Dhabi shoppers suffering from mega mall envy

Yas Mall is already 60 per cent leased ahead of its opening next year. Picture courtesy Aldar

For years Abu Dhabi residents looked on in dismay as one destination mall after another opened in Dubai.

But soon it will be the capital's time to shine.

This August will see the opening of The Galleria at Sowwah Square, a luxury mall on Al Maryah Island, which will be followed early next year by Yas Mall, a shopping centre on Yas Island that will be slightly larger than Dubai's Mall of the Emirates.

But that is not all, because in 2017 they will be joined by two other mega malls, Sowwah Central, also on Al Maryah, and The District, up the road on Saadiyat Island.

"Essentially a number of developers saw that Abu Dhabi [residents], particularly the most affluent nationals, were going to Dubai on the weekend and purchasing in the statement malls," says Richard Adams, the director and senior consultant at Acuity Middle East.

"I think a number of developers had the same idea. If they could create the right malls with the right tenants then they could ensure this demand, which was going to Dubai, stayed in Abu Dhabi."

As a result, all of the forthcoming shopping centres in the capital are so-called destination malls to rival the best Dubai has to offer and each features at least an element of luxury retail.

But does that mean they are all destined to be successful?

There is little chance The Galleria, the first of the four to open, will face difficulties attracting trade, according to David Macadam, the head of retail at Jones Lang LaSalle.

"I think The Galleria will be the most successful retail environment in Abu Dhabi in the next five years," he says.

The 33,000 square metre luxury retail and dining destination is a joint venture between Mubadala Real Estate and Infrastructure Gulf Related, the developer behind the Time Warner Centre in New York.

"We are comparable in size and quantity of tenants," says Kevin Ryan, the managing director of development at Gulf Related.

"We really think we are a significant anchor for entertainment and lifestyle in the immediate future for Abu Dhabi because there are so few places to go that you have so many options and we have approximately 25 food and beverage venues just in the retail project."

But there are several other factors that are likely to contribute to The Galleria's success, according Mr Macadam. The design is good and it is based in an area where hundreds of people will work.

But most importantly, the mall will feature top designer brands such as Miu Miu, Cartier, Prada and Dolce & Gabbana, in addition to food and beverage outlets including Zuma and Armani Cafe.

"We were fully leased six to seven months before we were due to open. That doesn't really happen in this region," says Mr Ryan.

"The success led to many of the retailer groups saying they liked the way we do business, they like working with us. They said, 'Why don't you do another project?'"

That led to plans to build Sowwah Central, also on Al Maryah. Together the two projects will feature approximately 186,000 square metres of retail, a little less than Mall of the Emirates.

Sowwah Central, which is due for completion in 2017, will include two large department stores, one of which could be Bloomingdale's, as well as 300 fashion retailers, 80 cafes and restaurants, a cinema, a health club, a hotel, serviced apartments and flats.

"I think the expansion of it will just add to the power of that already strong mix," says Mr Macadam.

But successful malls need more than good dining and retail options, he adds.

"The success of the best retail environments come from the best road access located in the area where there is the highest catchment and in areas where the shopping population has a demographic that can afford the products provided in the retail environment."

That means Yas Mall, located on Yas Island near the road to Dubai and close to the residential areas of Khalifa City A, Raha, Shahama and Al Falah, is also likely to do well, according to Mr Macadam.

At 235,000 square metres, Yas Mall is smaller than Dubai Mall but a little bigger than Mall of the Emirates, and the next shopping centre due to open after The Galleria.

"We are just over 60 per cent complete on construction, so we are still on track for completion in Q1 next year," says Jonathan Brown, the retail development manager for Yas Mall.

It will have about 450 stores, both high street and luxury. But how will it stand out among its rivals?

"I'm glad you asked the question," says Fred Douglas, Aldar's head of retail leasing.

"It is firstly a super-regional destination mall and that in terms of the shopping centre hierarchy is the highest calibre."

The mall will have the "widest and best" mix of outlets to satisfy demand, he says.

"At our size, no one can come anywhere near us for the complete retail shopping and entertainment experience."

But it would be foolish to think Yas Mall will not have any competitors, adds Mr Douglas. Any mall has the potential to affect another's footfall.

Another shopping centre hoping to do just that is The District just down the road on Saadiyat.

A joint venture between Tourism Development and Investment Company (TDIC), and L Real Estate, a global property development and investment fund sponsored by Louis Vuitton, which specialises in creating luxury shopping destinations, The District will feature 168,000 square metres of leasable space.

It is expected to include 550 luxury fashion retailers in addition to department stores and food and beverage outlets. Detailed design on the project is due to start this year, with construction commencing next year.

"The retail destination is scheduled for completion in 2017, around the time of the opening of the Guggenheim Abu Dhabi museum," says Ahmed Al Fahim, the executive director of marketing, communications, sales and leasing at TDIC.

And projects such as the Guggenheim will be important for all of the malls because of the visitors they will attract, according to analysts.

"It's about growing demand. That's the plan. It's not just about harnessing growth from local consumers. It's about accessing spend from all over the world," says Mr Adams.

But what effect will the new malls have on the existing shopping centres such as Marina Mall and Abu Dhabi Mall?

"The existing malls may suffer in the next few years unless they do something to upgrade their image. If you look at, for example, Dubai, BurJuman now is upgrading their older section so they are investing in retail," says Mr Macadam.

"Retail is all about keeping current, keeping up with the change and creating an environment people want to come back to over and over again."