Monday, Aug 29, 2016

Dubai: If the retail sector in Deira needs reshaping, then a Dh4 billion destination mall is going to provide just that.

Nakheel, the master-developer, is working on the final details of the mega-mall in the making — on Deira Islands — and which should be put out to tender shortly. It has the makings of being one of the most-coveted contracts Dubai’s construction sector will witness in the medium term, alongside that for The Tower [Emaar’s tallest structure in the world and located at Dubai Creek Harbour] as well as the signature projects, including the pavilion, that the Expo 2020 site will host.

The mall will have a spread of well over 600,000 square metres and be the focal point of the wider destination and tourist hub Deira Islands intends to become.

“The Deira Islands Mall contract should come to Dh4 billion ... even more,” said Ali Rashid Lootah, chairman of Nakheel. “I’m hopeful we will be in a position to finalise it soon.

“There’s no new retail space in that part of the city; and that’s why available real estate there tends to be much more expensive on the other side of town [New Dubai], which is where all the recent developments have concentrated. And you have people continuing to pay extremely high prices for Deira properties.”

Now that the initial works on shaping the Deira Islands is well advanced, setting up construction teams to handle the mall component should be relatively easy.

“We are not targeting high-end retail ... the plan is to do pre-leasing as per the needs of the market. The majority of the population is not in the high-end and I see limited growth in that category. The only exception to this as far as we are concerned is the Nakheel Mall [on the Palm] and that’s strictly dictated by the nature of the location.”

The current softening in the UAE retail sector does not faze Lootah much. “I can only go by what I’m seeing on my pre-leasing numbers and they are all positive,” the chairman said. “Most of our underdevelopment retail portfolio is seeing high pre-leasing activity — and it wouldn’t happen if the retailers did not know their business.

“Nakheel has the locations they want and our retail destinations can provide them with sizeable catchment areas.”

The Deira Islands Mall is a case in point. Apart from hosting a multitude of mid-market hotels, the Island will offer a mix of freehold and leased residential options.

“We will build a sizeable residential portfolio for leasing ... the city needs a mix of options and leasing will always continue to be sought after,” said Lootah. “We are not bullish about any particular trend ... but we are reasonably confident that things will go according to plan.”

Nakheel is already hitting the target on one score — getting international hospitality operators to opt for joint ventures with it. It already has one such arrangement, with the Spanish operator Riu. A second one with an Asian hotelier is also close to being inked, most likely this year itself.

“No other developer in Dubai had done JVs with hotel operators earlier — they were pure management contracts,” said Lootah. “Through JVs, the hotel operator has a direct stake in the success of the venture and will work jointly to get those numbers. And it means more investments coming from overseas into Dubai. That’s always a huge plus.”

By Manoj Nair Associate Editor

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