Despite the impact of the oil price downturn, the sultanate remains an attractive proposition for GCC-focused retailers and international brands. Compared to neighbouring markets in the UAE, Kuwait and Qatar, the retail footprint in Oman is less formalised and growing from a smaller base. Retail space per capita is the lowest in the GCC at 0.09 sq metres of gross leasable area (GLA), and there are promising opportunities for expansion.
New Developments
With more than 100,000 sq metres of new retail GLA delivered in 2015, Muscat was ranked 25th worldwide in the “Global Shopping Centre Development” report by CBRE, a global real estate consultancy firm. The rise in retail space that year was due to the completion of two shopping centres: Panorama Mall, with 21,000 sq metres of GLA; and Oman Avenues Mall, with 80,000 sq metres of GLA. Notable openings in 2016 include the April launch of Ocean Mall, a 4000-sq-metre development in the Qurum business district; the June launch of Oasis Mall, a 35,600-sq-metre development in Muscat’s Al Khuwair district; and the May launch of the first phase of the 36,700-sq-metre Nizwa Grand Mall in Nizwa.
Looking forward, the third quarter of 2017 will see the opening of the OR90m ($233.7m) Palm Mall Muscat, a 100% Omani investment by Al Jarwani Group (AJG) and Global Tamani, which will be located in Mabella, 14 km from Seeb International Airport.
Gcc Retailers
Broader expansion plans for retail majors largely remain on course. “Roughly 60-70% of the retail market in Oman is operated by pan-GCC retailers like Landmark Group from Dubai and Al Shaya Group from Kuwait,” Gogi George, general manager of project development and leasing at retailer LuLu Group International, told OBG, reflecting the interests of GCC-focused retailers on increasing their investment in Oman as part of a wider regional diversification play. “However, with the spend level of consumers dropping, retailers that may have brought in new aspirational brands may now instead focus on their core brands.”
Dubai-based retail group Majid Al Futtaim plans to invest up to OR515m ($1.3bn) in a series of retail developments across the sultanate through to 2020. The highest profile among these is the OR275m ($714.2m), 137,000-sq-metre Mall of Oman, which is expected to overtake Avenues Mall as the country’s largest integrated retail, leisure and entertainment destination when it opens in 2020. Additional investments in Majid Al Futtaim’s Oman pipeline include the 40,000-sq-metre City Centre Sohar, scheduled to come on-line in 2018; the 16,500-sq-metre City Centre Sur community mall, opening in 2017; and the planned OR5m ($13m), 3150-sq-metre expansion of the company’s City Centre Qurum in Muscat, expected to be completed by the end of 2016. These openings are expected to create 42,000 direct and indirect jobs between 2016 and 2020.
Refurbishment
As the retail segment has developed over the past four years, operators have identified a need to refresh their facilities in a phased approach every three to five years to remain competitive. To this end, Muscat City Centre has recently been expanded, Nizwa Grand Mall is currently in its next phase of expansion and Qurum City Centre is undergoing refurbishment that will increase its footprint. Avenues Mall is also expected to undergo an expansion of roughly 18,000 sq metres of GLA, currently in the design phase.
Neighbourhood Malls
With a current project pipeline stacked with the anticipated launch of major projects including Palm Mall and Mall of Oman, industry players like LuLu International Group view the market of large-scale malls in Muscat, already in excess of 30, 000-40,000 sq metres, as saturated. The focus for these groups has thus shifted to developing and refurbishing neighbourhood malls and hypermarket-mall hybrids to improve their merchandise mix and consumer experience. “The market is moving to a direction where you have large leisure shopping centres leading the overall offering, while the neighbourhood malls are working to cater to specific communities,” George told OBG.
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