The past few years have seen a major expansion of retail options in Ras Al Khaimah, with new malls, new neighbourhoods and numerous new strategies emerging. The year 2013 was shaping up as a period of consolidation, as major retail developers refine their offerings and fill their space.
Room To Let
Gross leasable area in the emirate may rise to almost 200,000 sq metres by 2015, according to a report by Cushman & Wakefield, the global real estate services firm. That would be more than double the total in 2010. This growth is supported by economic expansion, as RAK’s economy was quick to shake off any after-effects of the 2007-08 financial crisis. Its industrial sector is well positioned to capitalise on growth in the region as a whole, because it is highly correlated with construction and infrastructure, where a steady stream of major projects for the rest of this decade are in the pipeline. Infrastructure development across the GCC region and major events such as Qatar’s hosting of the 2022 World Cup will drive the need for materials in the construction market. In RAK, continued development and fine-tailoring of industrial activity promises to bring new clients and push broadbased development of existing companies.
Value For Visitors
Another major catalyst for expansion in retail will be growth in RAK’s tourism industry. Data from the Ras Al Khaimah Tourism Development Authority indicates that the sector currently accounts for 2% of the emirate’s GDP.
However, that figure is projected to rise to 9% within the next four to six years, according to the authorities, thanks to efforts by both the private and public sectors. RAK wants to position itself as an affordable luxury destination and is working to make this vision a reality. To that end, it is building hotels and resorts, overhauling the airport, expanding the size and scope of RAK Airways, and adding supporting offerings, such as malls, entertainment complexes, and more food and beverage options.
Retail outlets in RAK are developing in line with that aim, and in harmony with offerings in the rest of the UAE. RAK has historically pursued ventures and market segments that work to complement rather than compete with what is happening elsewhere in the GCC region. In tourism, that means aiming for the middle market of tourists, although for retailers this means that RAK is not likely to be a good fit for the most exclusive offerings. Though some luxury brands have been attracted to the emirate, for the most part retail developers are working to bring in mid- to upper-market names instead.
With plenty of luxury options available nearby in Dubai, the current thinking is that RAK’s malls should work on cultivating a broader appeal among other retail segments. To attract local visitors, for example, RAK’s mall developers are making entertainment features a strong part of their offerings. Malls in RAK are therefore developing not just as places to shop, but also as entertainment complexes. Several are in the midst of expanding cinema options, and many already offer family-friendly activities such as play zones, ice rinks and other attractions.
Neighbourhoods
RAK’s new focus will also, over time, help differentiate areas of the city. The commercial core, Nakheel, has long been the host to most retail options – streetside stores typically owned by independent retailers and locals have developed to serve all needs. Manar Mall, the country’s firstto-market shopping mall, emerged in Nakheel in 2000, and two others are found within a kilometre of it: Al Naeem Mall and RAK Mall.
The area is also home to Julphar Towers, the twin skyscrapers that serve as the signature of RAK’s skyline. Mixed-use developments such as this that include retail space are new to RAK, and owners are still experimenting to pinpoint exactly where demand will come from for their shops and restaurants. Other examples include a concourse of luxury retail in the Waldorf Astoria Hotel, and community retail spots within Mina Al Arab, a mixed-use development of residential and resort properties. In the future it is planned that the Bab Al Bahr project on Marjan Island, a man-made island that is being developed as a mixed-use destination for tourism, will have some similar options as well.
The latter three destinations are found to the south of the increasingly congested Nakheel, in an area called Al Hamra that is developing as an alternative residential area. Al Hamra is located near several industrial zones and factories, and has therefore emerged as a location of choice for the managers and executives of these ventures.
In addition, the area is home to a new cluster of high-end hotels, including the Al Hamra Fort Hotel and Beach Resort, the Banyan Tree Ras Al Khaimah Beach and the Waldorf Astoria Ras Al Khaimah, which recently held its “soft” opening (see Tourism chapter). The nearby Al Hamra Mall is thus considered the top-end choice among RAK’s retail options.
A third area of note is the Al Qawasim Corniche area – this strip is not adjacent to the Gulf, but instead overlooks a lagoon adjacent to Nakheel. Shopping options in the area are currently limited to traditional souq-like retail streets and some sweet shops and independent retailers and restaurants on the corniche. This is seen as a high-potential area for retail, however, and several restaurants and cafes, including the international brands Baskin-Robbins, Costa Coffee and Moti Mahal, have already opened up along a modern waterfront promenade.
Options Available
Whilst plans are being executed and expectations are high regarding the future, modern retailing in RAK remains in the developmental stages. Thus far, shopping malls are the most popular option for foreign investment, with standalone hypermarkets and small convenience stores typically owned by local investors.
A stroll through most of the emirate’s handful of main malls reveals plenty of unleased space available. Mall developers are confident that a bright future lies ahead, however, and told OBG that they expected 2013 to build on the success of 2012, when many of the emirate’s main shopping facilities completed their reorganisations and saw vacancies filled before the year’s end.
Mall Culture
Manar Mall was the only mall in the emirate until 2009, when the building boom started. Manar and Al Hamra Mall are both owned by Al Hamra Real Estate Development, which is also involved in several additional retail projects, including the leasing for Julphar Towers and Mina Al Arab. In anticipation of increased competition from the nearby RAK Mall, the management moved in 2011 to both carry out a renovation plan and overhaul its tenant mix, in an effort to differentiate itself from the other properties.
A handful of retailers in the region own franchising rights for hundreds of common mall tenants worldwide, and decide along with mall leasing managers on which brands are the right fit for particular locations. Typically negotiations cover several leasable locations at a time, meaning that if a franchising group wants a site in a particular mall for one of its brands, it may be required to lease space for several others it holds as well.
Al Hamra Real Estate Development is positioning Manar as a middle-market mall, and along with its anchor Carrefour, key tenants include H&M and Marks & Spencer. The few closed shops seen in April 2013 were not due to a lack of demand but rather the ongoing overhaul of tenants, the company told OBG. As of April 2013, footfall in Manar was roughly 25,000 on weekdays and 35,000 on weekends.
Rental rates in the facility range from Dh250-275 ($68.05-74.85) per sq foot. Elsewhere, prices in Al Hamra Mall, where vacancies remain, are considerably lower, ranging from Dh150-180 ($40.83-49) per sq foot. Al Hamra’s goal is to fill these vacant spots by the end of 2013.
RAK Mall, which is owned by Abu Dhabi’s Lulu Group International, envisions itself serving a middle- to upper-income segment of the market. By the end of 2013, it aims to fill empty slots in the mall, which are leftover from a soft opening in which sections of the facility were left unleased for an initial period. Expansion plans include a cinema to complement the ice rink that has already opened and serves as an entertainment draw. Mall officials told OBG that footfall ranges from 4000 to 15,000 a day, with an average of around 7000. RAK’s other main mall is Safeer Mall. Located between Nakheel and Al Hamra, the mall is anchored by a Carrefour and owned by Al Safeer Group of Sharjah.
Outlook
As RAK’s retail sector matures and malls evolve to target increasingly specific segments, there may be room for another facility aimed at the middle-income market. While the emirate’s retail offerings have increased significantly in recent years, this should be supported by economic growth, the expanding population and rising tourist numbers.
Read More from OBG
