Phil Mc 

Mega Projects in Dubai, 15th Feb. 2004

Mr. Phil McArthur Presentation

·         Mesdames et Messieurs, Bonjour ------ and that’s about as far as my limited French will take me today – so please excuse me if I revert to my other official Canadian language.

·         I am sincerely delighted to have the opportunity today to address your esteemed organization.

 ·         It is my pleasure to discuss the Mega Projects and

particularly Shopping Centers that are currently underway in our great city, Dubai. As George has told you, it is my privilege to be one of the Directors of Dubai Festival City.

·         If you are not aware, Dubai Festival City is a dynamic waterfront ‘city-within-a-city’ project currently being developed on the banks of the Dubai Creek. To put its size and scope into perspective, the project is almost three times the size of Monaco and covers 1600 acres, 70,000.00 sq. feet and 4.5 kilometers of Creek Waterfront.

Dubai Festival City has a magnificent location and we have something no other development in Dubai has to offer – a Creek side setting and a convenient location just two kilometers from the airport.

Of course, as you know, Dubai Festival City is one of a seemingly endless stream of mega projects being developed in Dubai.

It is easy to understand why Dubai is regularly hitting the international headlines while we are witnessing the building of

• The world’s tallest office tower
• 2 developments which both claim to be the world’s largest shopping centre
• 2 Palm Island projects which are visible from outer space
• ‘The World’ islands development
•  Dubailand – the mega of mega projects

 
All these developments will naturally encompass some retailing element – but on the retail side alone, there is a huge amount going on ---

·         We have come a long way since the Creek side souqs –

·         although they too will still have a significant role to play.

·         Let’s just look at what is happening on the retail front.

According to a recent Gulf Business report, there are no less than 20 new shopping centers either under development or on the drawing boards for Dubai. The emirate’s available gross leasable area – already the largest in the Gulf – is expected to increase by 270 per cent from around its current 7 million square feet to around 26 million square feet if all announced projects come to fruition.

Over 18 million square feet of new, mixed-use retail space will emerge onto the market in just the next three to five years.

·         Leading the way in terms of size of projects is Dubailand, a vision of his His Highness General Sheikh Mohammed bin Rashid al Makhtoum, who once again put Dubai in the world headlines with his vision for Dubailand.

·         A 35,000-acre mega project being billed as the largest, most diverse leisure destination in the world.

Whilst work has just started, plans for Dubailand’s retail component is ambitious and includes the 7 million square foot Mall of Arabia, which is double the size of the West Edmonton Mall in Canada, currently the world’s largest shopping centre.

Other retail projects in Dubailand’s brochure include:

Factory outlets (8 million square feet)

Auction world (9 million square feet)

World Trade Park (20 million square feet)

The Flea Market (1 million square feet)

A total of 5 projects on 46 million square feet and with a huge investment in infrastructure.

• Dubailand will be much more than just shopping…it will feature a Themed Sports & Outdoor world.
• A space science world.
• A vacation world and about 200 other private and public sector initiatives…it is truly the Disney World and beyond of the region.

However, not all new projects in Dubai are as futuristic.

·         Other retail developments include the current expansion of the Al Ghurair Centre which opened in the early 1980’s…it set the standard…with a mixed use development of retail, residential and office space. It was managed with a merchandising mix and a professional management team.

·         While it lost much of its market share during the mid-1990’s, the centre has worked hard and spent millions to expand and renovate.

·         By far the biggest impact on the Dubai market in the mid 1990’s was the arrival of Deira City Centre which is considered to be a model super regional Shopping Centre development in the Middle East. I had the pleasure of being involved in the management, expansion and leasing of this great centre from 1996 to 2002.

·         It is to date the most successful shopping centre in Dubai with over 1.1 million square feet of rental area.

·         The Centre is anchored by many international brands, including Carrefour and Debenhams and generates outstanding customer traffic day in and day out.

·         It is ten years since the Bur Juman Centre first appeared on the Dubai retail scene. This centre has a strong fashion influence and until recently operated without large anchor retailers.

·         In order to maintain its competitive position and take advantage of its strong urban location, the project is now undergoing extensive renovation and expansion.

·         The new Bur Juman will double the retail floor area to 800,000 sq ft and will feature the first SAKS 5^th Avenue store in the country. It will also house a 400,000 sq ft. office tower and 120 residential units.

Other developments in the expansion of retail in Dubai are;

·         The Gardens Shopping Mall – (3.1 million square feet of GLA with 300 stores)

·         Mall of the Emirates (2.4 million square feet of retail – and……..

·         the world’s third largest indoor ski slope)

·         The Dubai Mall – comprising 5 million square feet of retail space and which we’ve just recently heard will house the world’s largest indoor gold souq with some 260,0000 square feet of GLA.

·         It will be at the base of the world’s tallest office tower – The Burj Dubai.

·         And, a project dear to my own heart – Dubai Festival City with 1,7 million square feet of retail much of it centered around the waterfront Crescent which, with its expansive civic plazas will capture the feel of some of the best festival marketplaces in the world.

………..as I said, a seeming endless project list.

Who, I can almost hear you asking – is going to shop at all these projects? Certainly Retail International, the specialized London-based shopping centre consultancy firm, recently claimed that Dubai is on course to become possibly the most densely shopped city in the world.

·         But Dubai has always been an ambitious place and has regularly confounded the skeptics. Bear in mind that Dubai’s indigenous population has grown 24% over the past four years with a similar increase in GDP.

·         It is the sheer size and weight of the competition that will ensure that Dubai shoppers get better service and a much more sophisticated offering than perhaps any where else in Middle East. We will all be looking for new ideas and fresh ways of attracting consumers – the consumer will benefit – so too will the reputation of Dubai.

The fact is that there may be some fall out and for certain, the sector is going to become more competitive than ever – but consumers will go where they can not just shop, but relax and have fun in one destination ---- and they’ll go to the place that offers something different and provides the services they need --- including ample car parking --- and we all know what a challenge that has been in Dubai.

·         How do we go about growing our new markets?  Through the aggressive worldwide promotion already being undertaken by the public and private sector in Dubai. The public sector is spearheaded by the efforts of the Department of Tourism and Commerce Marketing – but the private sector too deserves credit. Many of us now take our projects on to the international stage. A visit to the MAPIC international retail forum held annually in Cannes might cause you to raise an eye brow – there are now exhibitors and participants from this region, including Dubai Festival City.

You’ll also find us at the World Travel Market in London, at the International Golf Tourism Market and MIPIM in Cannes and at many of the conferences staged globally for the retail, leisure and project development sectors.

·         Of course, much credit also has to go to Emirates, the award-winning carrier of Dubai –

·         which is one of the world’s fastest-growing airlines, with numerous international honours to its credit and with an international network soon to take in the massive North American market.

·         Also international brands have well and truly woken up to the Gulf market, and the potential of Dubai as a regional shopping hub and much of the success of shopping centres in the region has been achieved with the launch of International anchor retailers, in particular hypermarkets like Carrefour which has rapidly expanded into 5 countries

·         with 15 stores and is about to open in Saudi Arabia, Lebanon, Syria

·         and Bahrain.

·         Another International retailer that is making its mark as a multi-media anchor is Virgin Mega store which opened in Dubai in 2001 and is rapidly expanding in the region.

·         Luxury niche brands, such as Cartier, have found a tremendous opportunity to launch their collections in Dubai’s up market centers …….

·         Gucci, Louis Vuitton, Ralph Lauren, have all found a strong following here.

But the Gulf’s retail sector is not only about overseas brands looking inward – it is also about regional brands looking outward – a concept which would have been almost unbelievable 10 years ago.

·         Regional brands such as Paris Gallery – which now has a spectacular selection of luxury items, perfumes and cosmetics and with shops now exceeding 100,000 square feet, has raised the standards of regional brands enabling them to compete at the high customer expectation level that currently exists – and will likely get even higher.

·         A particularly powerful visual statement of Dubai’s vision is best shown by the Palm Developments– how daring, to create man-made islands in the shape of palm trees ---- but it’s happening. The Palm project followed a study undertaken for Dubai that revealed that the emirate would need 25,000 hotel rooms on the beach to meet its inbound tourism target.

·         Now today there are 4,000 hotel rooms on the shore – so you can see the problem. And with beach frontage running out, it became necessary to create a new shoreline. And it’s interesting to note from the Dubai Development Investment Authority that over 70% of the opportunities on both Palm Islands have already been taken up – a clear indicator of demand.

So, to sum up the future, 15 million tourists by 2010 – an average indigenous population growth rate of 8% -and Dubai as a commercial hub servicing a region of 1.5 billion consumers that includes the GCC, Levant, Africa, Central Asia and the Indian Sub-continent – 27 million square feet of shopping could just be the start.

Differentiation will be key to winning footfall –

·         at Dubai Festival City we will not be in the race to be among the biggest in the world – just among the best – having taken the best the world has to offer and combined it into one place.

·         Our objective is to create a wonderful environment for people to shop, dine, play and relax.

·         The main retail project, The Crescent, will open in September of 2006 and will feature 1.6 million square feet of retail across five zones.

They are:

-          Value retail, with a 280,000 square feet IKEA store and a 250,000 square feet international hypermarket

-          The Boulevard, which will host 10 iconic flagship retailers that will anchor the look and feel of the fashion mall. Commitments have been received from Marks & Spencer, Paris Gallery, Toys R Us, Plug Ins electronics and negotiations are progressing well with other international brands.

-          The Crescent which will feature a strong selection of 250 line shops with many familiar brands to create a solid offer for our customer

·         The true points of difference at Dubai Festival City will be our commitment and engagement of people and the environment. The project is designed to create a focal point for Dubai – on the Creek, the traditional gathering place of Dubai.

With over 10,000 parking spaces, world class retailers and an environment that is second to none, the Al-Futtaim Group is confident that Dubai Festival City will find its market and loyalty in the highly competitive Dubai retail landscape.

We will have a strong focus on entertainment – we will create a Crescent environment similar to the Champs Elysees

·         but with a waterfront fascia – a place where people will congregate, dine, relax, have fun ------- and watch magnificent sun-sets ---- an offering, we are confident will repeatedly bring people back for more.

·         Of course, the sun is unlikely to set on Dubai’s growing ambitions and I suspect it won’t be long before today’s presentation is actually out-dated. These are thrilling times – we’re all privileged to be a part of the development of this vibrant destination, which I am sure, will continue to expand for many years to come.

Mesdames et Messieurs – thank you for your attention – and bon appetite!