Dubai: Nakheel believes its new mall will fill a retail gap in Palm Jumeirah and create a destination but some analysts are concerned that it may be a challenge to compete with existing mega malls.
The Nakheel Mall, a one million square-foot project slated for completion by 2016, is needed to serve the expanding community at the Palm Jumeirah where providing basic amenities will be the focus, said Sanjay Manchanda, Nakheel’s chief executive.
“It’s a much needed project on the Palm. There’s nothing to cater to people there,” he said.
“We are not looking at is as creating another mall, it’s creating another destination, enhancing the experience,” Manchanda said.
Demand for destination malls is expected to “remain strong” in the medium term due to rising tourism numbers, a growing local economy and the continued flow of capital into the country, according to Matthew Green, head of research and consultancy at CBRE Middle East.
However, he noted that the delivery of any major new mall in an established market came with “a high degree of risk”.
“The proposed Nakheel Mall will be competing with existing mega malls, which could prove to be a challenge given the location and current road infrastructure. Whilst the proposed facility can realistically attract a significant portion of the local resident demand, there would have to be a major differential and destination offer to compete with Mall of Emirates and the Dubai Mall for the more lucrative tourism dollar,” Green said.
The high occupancy and performance of Nakheel’s existing malls, such as Ibn Battuta Mall and Dragon Mart, show that there is room in the market for more malls, said Mohammad Rashed Bin Dhabeah, managing director of development, project logistics and shared services at Nakheel.
“Our malls are leased out and there is room for growth,” said Manchanda.
The Palm Jumeirah is underserved by retail at the moment and residents have to leave the community for their retail needs with only a small number of food and convenience outlets open there.
“However, the development continues to attract new investors and residents alike, Nakheel is looking to bridge the gap in facilities to create a more liveable community environment,” Green said.
The Nakheel Mall and The Pointe, another retail project in the works, will help Nakheel to diversify its portfolio through income-generating assets that can provide more long-term stable revenue for the company,” he said.