Developers are capitalising on Sharjah’s appeal as a retail destination, driving a strong flow of new developments and expansions in retail real estate.
Sharjah’s wholesale and retail trade already represents a significant component of the emirate’s economy, accounting for 12% of GDP, according to the Sharjah Investment and Development Authority (Shurooq). This contribution is set to expand, with a recent acceleration in the release and construction of new retail space in the emirate.
One of the cornerstones of this development drive is City Centre Al Zahia, a Dh2.6bn ($707.9m) project being undertaken by Dubai-based developer Majid Al Futtaim.
The new mall, announced in early May, will have a gross leasable area (GLA) of 136,200 sq metres. With its completion date set for 2020, City Centre Al Zahia will comprise a 15,100-sq-metre Carrefour Hypermarket, 16-screen cinema complex and outlet space for 360 retailers.
According to Ghaith Shocair, CEO of Majid Al Futtaim Properties, Sharjah’s promising economic prospects made expanding the company’s profile in the area a logical step.
“Sharjah’s robust economic growth and the continued investment in its tourism, manufacturing, culture and transport sectors make it an ideal destination for further development, especially in the retail, food and beverage, and entertainment landscapes,” Shocair told local media at the announcement ceremony of the mall.
The 91,000-sq-metre Tilal Mall is another large-scale retail centre under construction. At the centre of the wider Tilal City development – a mixed-use community being undertaken by Sharjah-based Tilal Properties – the shopping centre is scheduled to open in 2019.
Meanwhile, the 37,000-sq-metre, Dh210m ($57.1m) Zero 6 retail centre is being developed by Sharjah’s Alef Group in the east of the city and is set to open by the end of the year.
Zero 6 is the company’s first construction project, with feasibility studies for its development highlighting its position in an area with over 35,000 residents, of which 95% are in the high-income bracket.
All told, 278,000 sq metres of prime retail space is set to be added to the emirate’s profile by 2020, according to estimates in the local media.
Established players move to expand
The wave of new retail developments currently being rolled out has also driven upgrades to existing retail centres as developers attempt to maintain customer loyalty and footfall in the face of increased competition.
In June last year, Sahara Centre added space for another 120 retailers with a 92,000-sq-metre expansion, bringing its GLA to 69,677 sq metres, while City Centre Sharjah, another Majid Al Futtaim property, is undergoing a 13,400-sq-metre extension that will take its GLA to 51,400 sq metres.
Although the upgrades should bring an increase in customer numbers, older retail centres may still struggle to compete with the fresher offerings if established outlets decamp to reopen in the new malls.
Such circumstances might see a reduction in rental rates in older centres as their management seek to retain occupancy rates and compete with the newly launched rivals.
Tourism growth a boon to retail
While a sudden influx of competitors into the marketplace might be of concern to some, the sector could benefit from the rapid growth recorded by the emirate’s tourism industry in recent years.
Last year, hotels welcomed 1.8m guests – a 17% increase on the 2015 figure – and the Sharjah Commerce and Tourism Development Authority (SCTDA) aims to bring the figure to 10m by 2021.
A drive from the SCTDA to explore new source markets should also bring benefits to retailers. As part of these efforts, the SCTDA took part in the first ITB travel trade fair to be held in China last month.
Sharjah has already made headway in boosting visitor numbers from China, having received 86,000 tourists from the country last year. This represented a 63% increase on 2015.