Retail sector is attracting huge investments from major foreign retail chains
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.