Re­tail sec­tor is at­tract­ing huge in­vest­ments from ma­jor for­eign re­tail chains

Oman - A Nation on the Move - - Contents -

The Sul­tanate’s re­tail sec­tor seems to be at a prime po­si­tion to sig­nif­i­cantly con­trib­ute to the GCC’S con­tin­u­ing re­tail growth story. The mar­ket con­fi­dence in Oman is hugely at­trib­uted to the coun­try’s soar­ing eco­nomic growth, pro­jected to rise to 2.9 per cent this year from 1.1 per cent in 2017. Among the GCC coun­tries, Oman is seen as the fastest grow­ing econ­omy with tourism be­ing one of the key com­po­nents as ar­rivals are ex­pected to in­crease at a com­pound an­nual growth rate of 13 per cent be­tween 2018 and 2021, ac­cord­ing to a re­port by Col­liers In­ter­na­tional. Re­tail space ex­pan­sion has been go­ing on in re­cent years as ma­jor de­vel­op­ers flock the Sul­tanate to set up shops, mostly from pan-gcc re­tail­ers and large-scale malls tak­ing up new spa­ces in cities such as Mus­cat, Sohar and Nizwa.

More than 6.2 mil­lion sq m of re­tail de­vel­op­ment are ex­pected to take up sig­nif­i­cant spa­ces across the GCC coun­tries within the next five years, ac­cord­ing to a re­port from Alpen Cap­i­tal,

a lead­ing in­vest­ment group, which fur­ther sees the mar­ket to grow as much as $313 bil­lion by 2021 and a ma­jor con­trib­u­tor to the re­gion’s non-oil eco­nomic de­vel­op­ment. Although the long-term fun­da­men­tals re­main strong, the re­tail mar­ket in Oman is presently un­der pres­sure due to cur­rent eco­nomic con­di­tions. The im­pact on the re­tail sec­tor has been higher com­pared to its GCC coun­ter­parts. Con­sumers are be­com­ing cau­tious and fo­cus­ing on buy­ing es­sen­tial items. Their spend­ing power may fur­ther come un­der pres­sure, as the gov­ern­ment plans to in­tro­duce taxes, es­pe­cially value added tax (VAT) in 2019.

Oman’s re­tail land­scape is con­cen­trated in the hands of stand­alone re­tail out­lets and has sev­eral re­gional and in­ter­na­tional re­tail­ers. As con­sumers look for a whole­some shop­ping ex­pe­ri­ence com­bined with entertainment, the re­tail mar­ket in the coun­try is trans­form­ing to ac­com­mo­date large leisure shop­ping com­plexes. Sup­ply of re­tail space has gained steam in the last two years, which saw ad­di­tion of large shop­ping cen­ters like Av­enues Mall, Oa­sis Mall and Panorama Mall, among oth­ers. The or­gan­ised malls and stand­alone re­tail out­lets are largely con­cen­trated in Mus­cat. Over­all, the city has about 345,000 square me­ters of leased mall space. There are many re­tail projects un­der­way, in­clud­ing Palm Mall Mus­cat, Mall of Oman and some com­mu­nity cen­tres.

In­creas­ing pop­u­la­tion and in­ter­na­tional tourist ar­rivals have been the vi­tal driv­ing forces of the re­tail mar­ket in Oman. A high com­po­si­tion of young and work­ing class has led to a shift in con­sumer pref­er­ences to­wards in­ter­na­tional foods and western prod­ucts. This is fur­ther sup­ported by an in­crease in house­hold spend­ing power over the years on ac­count of the eco­nomic di­ver­si­fi­ca­tion and gov­ern­ment-man­dated pay hikes for na­tion­als.

Re­tail sec­tor is at­tract­ing huge in­vest­ments from ma­jor for­eign re­tail chains, es­pe­cially from neigh­bour­ing United Arab Emi­rates (UAE), as well as from home-grown busi­ness­men. This is con­sid­ered as a vote of con­fi­dence in the growth of re­tail sec­tor and the Sul­tanate’s econ­omy. Ma­jor re­tail giants, in­clud­ing Ma­jid Al Fut­taim, Al Jar­wani group (Palm Mall) and Lulu group, are all go­ing ahead with their multi-mil­lion ex­pan­sion plans as per their ear­lier plans. These groups are build­ing malls, hy­per­mar­kets and su­per­mar­kets not only in Mus­cat, but also in sev­eral cities across the coun­try.

The gov­ern­ment has ini­ti­ated ma­jor strate­gies to tide over the fis­cal chal­lenges, which is ex­pected to prop up the Sul­tanate’s eco­nomic growth. Since the neigh­bour­ing United Arab Emi­rates is more or less sat­u­rated, the ma­jor chains are look­ing at coun­tries like Oman to ex­pand their malls and hy­per­mar­ket net­work. The vast area and scat­tered pop­u­la­tion (which touched 4.64 mil­lion by the end of Oc­to­ber 2017), es­pe­cially in in­te­rior towns, also of­fers an op­por­tu­nity for these busi­ness houses to in­vest in Oman.

The Uae-based Ma­jid Al Fut­taim Prop­er­ties, the lead­ing shop­ping mall, re­tail and leisure pi­o­neer across the Mid­dle East and North Africa (Mena) re­gion, has com­menced con­struc­tion works of Mall of Oman, set to be the Sul­tanate’s flag­ship des­ti­na­tion for re­tail, leisure and entertainment. On com­ple­tion in 2020, the su­per-re­gional mall will fea­ture 350 out­lets in a 137,000sq-m re­tail space. It will also fea­ture sev­eral ‘firsts’ in­clud­ing Oman’s largest snow-park, with a 8,000-sq-m play area, and a Lit­tle Ex­plor­ers edu­tain­ment cen­tre.

Mall of Oman, a su­per-re­gional mall that is part of a wider RO515 mil­lion in­vest­ment in Oman, will also in­clude the Sul­tanate’s first largest VOX Cinemas and Magic Planet - the lead­ing fam­ily entertainment cen­tre in the re­gion. The coun­try’s new shop­ping and entertainment des­ti­na­tion is ex­pected to gen­er­ate 1,500 jobs for its con­struc­tion and a fur­ther 3,500 jobs once opened and will en­hance the Sul­tanate’s re­tail and entertainment of­fer­ing for both res­i­dents and tourists.

Ma­jid Al Fut­taim has also an­nounced plans for a new RO45 mil­lion shop­ping cen­tre in Sohar. City Cen­tre Sohar, on Bati­nah High­way, will in­clude 130 stores, a Car­refour hy­per­mar­ket and a nine-screen VOX Cin­ema as well as din­ing and entertainment venues across 40,000 sqm of leasable space. The project will add to MAF’S other prop­er­ties in Oman in­clud­ing the newly up­graded City Cen­tre Qu­rum and City Cen­tre Mus­cat, which re­cently un­der­went an RO27 mil­lion ex­pan­sion.

Oman Tourism De­vel­op­ment Com­pany (Om­ran), the ex­ec­u­tive arm of the Gov­ern­ment of Oman for the de­vel­op­ment of the tourism sec­tor and Ma­jid Al Fut­taim (MAF), the lead­ing shop­ping mall, com­mu­ni­ties, re­tail and leisure pi­o­neer across the Mid­dle East, Africa, and Asia, an­nounced a strate­gic part­ner­ship to de­velop the western area of Mad­i­nat Al Irfan. The joint ven­ture will see the de­vel­op­ment of a vi­brant mixed-use com­mu­nity that will serve as the new ur­ban cen­tre for Mus­cat. This new part­ner­ship plays a ma­jor role in Oman na­tional eco­nomic di­ver­si­fi­ca­tion agenda and re­flects Om­ran’s strate­gic role as a cat­a­lyst of in­vest­ment that forges solid part­ner­ships with trusted de­vel­op­ers like Ma­jid Al Fut­taim to cre­ate sustainable ur­ban des­ti­na­tions and sig­nif­i­cant so­cio-eco­nomic ben­e­fits to the Sul­tanate. Mad­i­nat Al Irfan is the Sul­tanate’s largest ur­ban de­vel­op­ment project. It is set to con­trib­ute to Oman Vi­sion 2040. The eastern area cur­rently be­ing de­vel­oped by Om­ran sits along­side Wadi Park just minutes from the newly opened Mus­cat In­ter­na­tional Air­port. It is a multiuse dis­trict ad­join­ing the Oman Con­ven­tion & Ex­hi­bi­tion Cen­tre (OCEC), a world-class venue for in­ter­na­tional con­fer­ences, trade shows and con­certs. The new mixed-use com­mu­nity is lo­cated at the western area of Mad­i­nat Al Irfan and spans over 4.5 mil­lion sqm.

Also, Ma­jid al Fut­taim opened its first com­mu­nity mall- My City Cen­tre Sur. With an in­vest­ment of RO15.2 mil­lion, My City Cen­tre Sur is ex­pected to cre­ate more than 4,000 direct and in­di­rect job op­por­tu­ni­ties in the sur­round­ing area.

The Palm Mall Mus­cat, which is in an ad­vanced stage of com­ple­tion, is an­other mega mall that is tak­ing shape in the Sul­tanate. As a vast re­tail des­ti­na­tion, it will give the Sul­tanate’s shop­pers a taste of what is al­ready on of­fer in well-de­vel­oped re­gional mar­kets. The Palm Mall Mus­cat is lo­cated in Ma­bella, 14 kilo­me­tres away from the

Mus­cat In­ter­na­tional Air­port. The prop­erty is po­si­tioned off Al Khayr Street in Ma­bella, Al Seeb, to the west of the es­tab­lished res­i­den­tial area of Ma­bella.

The Oman Aquar­ium, first and largest of its kind in Oman and snow vil­lage, which will be built in orig­i­nal snow, are some of the at­trac­tions of the mall, which makes it dif­fer­ent from oth­ers. Apart from Lulu hy­per­mar­ket, the mall will also have a mul­ti­plex with a VOX cin­ema.

Al Araimi Boule­vard, which is con­sid­ered as the largest fam­ily entertainment cen­tre tak­ing shape in Oman, is an­other ma­jor mall that will change the shop­ping ex­pe­ri­ence of peo­ple in Al Khoud and Al Bati­nah gover­norate.

The new shop­ping mall, which is com­ing up in an area of 147,000 square me­ters in two floors and a rooftop for park­ing, will have 250 shops, ten mod­ern cin­ema halls, 20 di­ver­si­fied restau­rants and 3,000 park­ing space. De­vel­oped by Al Raid Group in co­op­er­a­tion with De­sign In­ter­na­tional and Kaosys, the mall has a to­tal lease area of 70,500 square me­ters. The to­tal in­vest­ment for the project is es­ti­mated at RO62 mil­lion. With com­ple­tion, Al Araimi Boule­vard will host many in­ter­na­tional brands and world class fa­cil­i­ties for entertainment to make the shop­ping ex­pe­ri­ence a unique one. The entertainment area stretches over 6,000sqm and pro­vided with mod­ern 10 screen-cinemas, the largest food court host­ing 20 restau­rants. The Al Araimi Boule­vard (ABLVD) presents a strong prod­uct of­fer­ing amidst a grow­ing num­ber of mall de­vel­op­ers from across the re­gion en­ter­ing the mar­ket.

Lulu Group has opened sev­eral out­lets in far off places to cap­ture the in­te­rior re­gions, in­clud­ing Ma­bela and Suwaiq. The group opened Bidiya hy­per­mar­ket, which was the 19th out­let in Oman and 131st store in the re­gion. It is spread over an area of about 75,000 square feet and sit­u­ated in a prime lo­ca­tion of Bidiya.

An­other re­tail gi­ant that is plan­ning to ex­pand in Oman is Spar In­ter­na­tional — a Dutch multi­na­tional re­tail chain - which plans to open sev­eral out­lets in tie up with Khimji Ram­das group. So far, Spar has con­verted and mod­ernised 15 Khimji’s out­lets in dif­fer­ent parts of the coun­try. The com­pany has united with Khimji Ram­das — the li­cenced Spar part­ner for Oman — op­er­a­tional since 1870 and one of the lead­ing busi­ness con­glom­er­ates in the Sul­tanate. Spar’s strength lies in of­fer­ing multi-for­mat (small, medium and big) re­tail out­lets to di­ver­si­fied pop­u­la­tion at var­i­ous lo­ca­tions.

Mars In­ter­na­tional, a home-grown re­tail chain, also plans to open sev­eral more out­lets in the next cou­ple of years. With the launch of Mars Hy­per­mar­ket in Al Khoudh, the re­tail gi­ant is con­sol­i­dat­ing its dom­i­nance in the coun­try.

With all these ma­jor devel­op­ments, a sig­nif­i­cant vol­ume of new re­tail space is set to en­ter the mar­ket over the next five years, across a mix of both mall based and mas­ter plan devel­op­ments. The Sul­tanate’s eco­nomic di­ver­si­fi­ca­tion strat­egy which fo­cuses on re­tail and tourism is a key driver for growth.

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