Dubai: BurJuman has announced an expansion plan of more than Dh370 million in a bid to reposition itself against newer, mega-sized challengers at a time when the local retail sector is still decidedly soft.
As part of the phased transformation, BurJuman Centre will work more diligently on its entertainment offerings, which will see the creation of an eight-screen cinema complex.
The tenant mix will also be put through a major shakeup, with the promoters looking to draw in as many as 100 new brands to its outlets.
But achieving change in the business of retail — and more so in mall management — can be daunting. Can BurJuman turn the clock back and regain some of the sheen it lost in the last two years?
For Eisa Adam Ebrahim, the general manager, there are no such doubts. And he outlines why it is so.
Isn't it a fact that BurJuman's location has proved a disadvantage in the recent past? More so with many mega malls opening in New Dubai?
Certainly, there's some truth to this. It's no secret that there's been a shift of demographics — especially of the high-end base — from this part of Dubai to neighbourhoods in New Dubai.
But having said that, people are still living in this area and a number of good apartments are still being built here. So are three- and four-star hotels that bring in the tourist-shoppers. Let's not overlook their spending powers.
Dubai's road infrastructure has changed dramatically in the last two years. You don't get to see any of the traffic jams that were so common when all the new roads were being built.
Getting to any location is not difficult any more, and that holds true for any shopper planning to visit BurJuman. I don't think our location is a disadvantage. If anything, it works in our favour — that of being at the very heart of the city.
But hasn't there been an erosion in your visitor numbers?
There was an erosion of... 20 per cent since 2008, which was recorded during the worst phase of 2009. But now we see the numbers coming back in our favour and currently it's 10 per cent off the peak. There were many reasons for this — the competition, the economic crisis that hit tourist traffic, the road works, etc.
So, what's being attempted with the latest expansion? Is it about getting that exclusivity back?
We want to give the most boutique kind of feel for the high-end shopper who wants ease of access, of parking and [the ability to move] within the mall. There's a certain class of shopper who does not want to walk kilometres within a mall to get to the shop of his choice. And then have to walk all the way back.
But why go for an expansion now? Doesn't the state of the market suggest caution should be the prime consideration?
For tenants who stood by us through all the challenges, it's our obligation to add a new look and feel and create more excitement.
From an investment point of view, we should be running with it, not [placing] everything on hold.
Is the tenant mix going to change?
To be the boutique kind-of retail offering, we have to. Of the 350 stores, there will be 100 new boutiques that are distinctly high end, of international origin and very niche.
Some of these brands are already available in Dubai at other locations. Many of them had in the past approached us and we could not accommodate them. Now we want to bring together all these scattered brands under our roof. We want to make a grab for them, but we need to have a look and feel to the mall that will make our offering even more attractive.
As for the other brands, we will go to the fashion weeks in London, Milan and New York to see which brands can be brought over to Dubai. Mind you, there will always be some. Fashion is one business where rankings change all the time. This is what we did five years ago at the time of the earlier expansion. You could say we have the experience and know-how to do it all over again.
We were successful in bringing Saks Fifth Avenue and Versace then; I don't see why we can't do something similar now.
Are you creating space for more outlets?
We will maintain the current 350 odd, but bring in the 100 new boutique brands.
Wouldn't it mean some of the existing tenants would have to make way?
This is the nature of the business. For us, the state of the market creates a good opportunity to change the tenant mix. It would have been difficult to change anything if the market was on a high.
At the same time, some of the existing tenants would leave on their own for reasons that could do with the current traffic to the mall, their sales volumes, etc. Even for them, it's an opportunity to seek change.
As I said before, it's very similar to the fashion business. Something new has to be attempted at all times.
Will the latest expansion integrate the Metro much more closely?
Even now the Metro station is just a few metres away from us. But the renovation will acknowledge the Metro's presence even more. It's part of the design.
Wasn't it the case that cinema was never meant to be part of BurJuman's offer mix? Why now?
We never shied away from that. It was part of the mall's design for years now and was just a matter of time before we took it up. But when we went through the last major expansion in 2003, the market was in a great shape. The facility was generating substantial revenues and we did not want to disturb the status quo at the time.
We will have eight screens on the fourth floor. Three operators are in the running to manage this. We are working on creating an offering that would still be different from others already in the marketplace.
We are adding other entertainment options as well; the challenge is to create an ideal children's entertainment centre. It will be more about edutainment; if it's pure entertainment, other malls are already providing it. But we had to bring something new and have shortlisted two operators.
Your previous expansion went through a major delay. How will you ensure it will not happen this time?
We have to make use of our experience from the last one. What led to the delay was it was a mixed-use project we were attempting then by creating the offices and residences.
The delay was a bad experience. This time we are going ahead with a conventional kind of design; we have well-defined timelines for each phase of construction.
What sort of investments will the latest expansion entail?
It would be about Dh370 million-Dh375 million. It will be a mix of bank finance and our own funds.
By going in for construction now, we aim to keep the costs on the lower side. Construction is almost on hold in the city.
We are negotiating with three candidates, one of which is an international name.
By August or September, we should be ready to announce the winner and then start construction in the fourth quarter.
There has been some speculation that Saks Fifth Avenue might leave. Is there any truth to this?
Not true. We have had a longstanding relationship with the local operator of Saks and will continue to have one.
How many anchor tenants will there be after the latest expansion? You are also bringing in a supermarket operator, aren't you?
There will be three anchors as against two now. There will be a supermarket, because these days you see the format even in a high-end mall offering. This was introduced in this part of the world.
Even now your rentals are among the highest in the market place. Do you see that changing slightly?
We definitely don't have the highest rental in the market any more.
We are working closely with tenants to ensure their interests and their bottom-line are taken care of through extended rent-free periods and other incentives.
These are challenging times and as a mall operator we need to keep this in mind.
Having said that, we are still among the top-tier malls in the region in terms of lease rates and for the experience we offer.
What we are embarking on now will ensure that standing remains.