Dubai: The Mohammad Bin Rashid City (MBR) is expected to build on the sectors that already drive Dubai’s economy as well as attract a larger mix of international retailers and stimulate competition among major malls in the emirate, analysts say.
The mega-development was announced after Dubai showed signs of recovery from the global financial crisis of 2008, which was when several massive projects were put on hold.
The question on the minds of many is, is it happening too much too soon again?
“If it were to come in one go, it would be too much too soon, that’s why it’s important for it to be phased over a long time,” said Craig Plumb, the head of research with Jones Lang Lasalle.
At the moment, the market now cannot absorb 100 new hotels or the world’s biggest mall — this will take time and demand-generating offerings such as the Universal Studios theme park that is being planned, he said.
Dubai will not see a repeat of the excessive lending and announcements of grand projects that were eventually put on hold during the crisis, said Mario Maratheftis, global head of macro research at Standard Chartered bank.
Different market conditions
“What we saw before was excessive lending and excessive growth, which we are not seeing now. The credit growth is pretty tight and the market conditions are different than before. Lending growth is minimal and I don’t think that will change in 2013,” he said, adding that there will be an appetite for funding long-term projects. Some analysts believe there is more space for retail expansion in Dubai now.
“There’s no question that Dubai needs more mall space. There is a theory that Dubai is ‘over-malled’ but Dubai Mall is seeing footfall of 54 million this year that’s expected to reach 60 million,” said Shane Eldstrom, director of education at the Middle East Council of Shopping Centres. “When you have properties performing at these levels you know there’s room for more space at this retail potential.”
Mohi-den Bin Hendi, president and chairman of the board for Bin Hendi Enterprises, the major retail group, said that the plan for the world’s largest mall was a “challenge” but will be “definitely viable.”