Dubai: Al Futtaim Group Real Estate does not believe in the “one at a time” build strategy. The mall developer has got six simultaneous projects going on in the region with a combined development cost tab of $6 billion. That includes the massive redevelopment of its flagship Dubai Festival City Mall, to turn it into one of the prime retail and tourist attractions in the city.
“Currently, DFC remains a magnet for the local shopper, with 80 per cent of the mall traffic represented by them,” said Marwan Shehadeh, Group Director for Corporate Development. “But with the full-scale expansion that’s been initiated, we are talking about creating attractions that will prove a must-see for tourists, something similar to what Dubai Mall has with its fountain and Mall of the Emirates its Ski Dubai.”
DFC will create an “iconic structure” — located close to the Marina — the details of which will be announced shortly. In fact, the overall expansion will push it as close to the Marina as is physically possible. The existing canal will be covered and become an integral part of the racetrack mall. In addition to the mall’s redevelopment, costing Dh1.7 billion, DFC will also add to the destination’s commercial and residential stock as well as new hotels.
The DFC expansion is critical to the developer’s multi-front push. “While the hotel, office, golf course and residential components were extremely successful from the launch phase, on the mall side mistakes were made,” said Shehadeh. “These had to do with the design and in the original tenant mix, which meant that some of the biggest local retail groups were under-represented.
“The expansion and how the many parts will now be fixed is a result of the many lessons we learnt from those mistakes, which date to 10-12 years ago when the original construction started. Even before the expansion, retail groups are now listening to us.
“The mall occupancy has gone up to 95 per cent within the existing GLA (gross leasable area) from 75 per cent. Recently H & M and Landmark opened at Dubai Festival City with many other major anchors opening soon.”
Impressive scale is the common denominator in all of Al Futtaim projects. At 260,000 square metres, the Riyadh Diryah Festival City will punch in the super-regional category and be the largest in Saudi Arabia, while the project in Casablanca will create 120,000 square metres.
Recently, a 100,000 square metre Muscat Festival City was announced, and the first phase of the 250,000 square metre Doha Festival City anchored by Ikea has now been open for over a year. Moreover, Cairo Festival City, the largest mall in Egypt with 170,000 square metres of GLA opened last November.
“In most of these projects we have created joint ventures with local entities, and have the lead in the development process,” said Shehadeh. “Such joint ventures are the exception in the region’s mall development sector where most of our competition prefers to go it alone.
“But we believe there is much value that can be created by tying up with the right partner who has an acute understanding of his local market environment.”
On whether a piecemeal build approach would have been better, Shehadeh said: “There’s no such thing as perfect timing — projects will have to be mobilised and it could be that they happen earlier or later than what the developer would ideally want, depending on when the opportunity presents itself. But that’s the nature of the development business.
“It’s a reason why we have local partners in these developments, they help bridge the local know-how that we, as an outsider, may lack.”
The six projects will keep the developer busy for a while. It will now take a breather on further projects until the Riyadh and Muscat projects start construction.
But at some point, it could consider making a push into Algeria, rated by Shehadeh as a top-notch prospect from a mall developer’s perspective.
“The Al Futtaim Group through its many operations has had an exposure in the region. We are no longer a Gulf based entity but making the cut to be a global multinational,” said Shehadeh.
