Dubai, September 21, 2005: Emaar Properties PJSC, the world’s largest real estate company by market capitalization, today announced plans to aggressively expand the retail sector with investments of over AED 15 billion to develop about 100 malls in the mega emerging markets of the Middle East, North Africa (MENA) and the Indian subcontinent.
The Company has decided to incorporate a fully owned subsidiary, Emaar Malls, which will develop world class shopping malls in the UAE, Saudi Arabia, Jordan, Syria, Lebanon, Algeria, Morocco, India and Pakistan. The Company is already fast developing the world’s largest shopping destination – the 12 million square feet Dubai Mall – in the Burj Dubai Development in the heart of Downtown Dubai.
His Highness General Sheikh Mohammed Bin Rashid Al Maktoum, Crown Prince of Dubai and UAE Minister of Defence said: “The Dubai Mall is shaping up to be an example of what can be achieved in this region and is an iconic symbol of what we could share and replicate here and elsewhere, starting first with the Gulf and South Asian regions.”
To successfully penetrate into these markets and accelerate the entry process, Emaar Malls will leverage the strategic international operations that Emaar Properties already has in Saudi Arabia, Morocco, Egypt, India and Pakistan, besides its home base in the UAE.
Emaar Malls would tap into Emaar Properties’ established reputation and depth of experience as a developer and manager for commercial, residential and retail properties in the UAE and internationally.
Speaking at a press conference here today, Emaar Chairman Mohamed Ali Alabbar said: “The malls would benefit the Group in two ways: revenue would come from both real estate development and later on from managing these malls as assets to the Group. Our strategy would be to procure land at competitive prices and then unlock their potential by developing them into retail properties of good real estate value.
“The Middle East and the Indian subcontinent have a combined customer base exceeding two billion, of which half are young people who are increasingly enjoying higher disposable income levels and aspire for a better lifestyle. This will form significantly lucrative catchments for the customer base for Emaar Malls. In addition to good quality housing, people are increasingly looking for a fantastic shopping experience, rivaling that of developed countries. We aim to create this for them.
“The GDP of the countries in the catchments are in excess of $1.7 trillion and the retail sector will be one of the key drivers of growth and development in this region. International studies by renowned consultants such as McKinsey have clearly demonstrated that the retail industry is one of the largest worldwide and growing at a rate of 15 per cent annually. Over 45 per cent of the GDP of any economy is driven by the retail sector,” Mr. Alabbar said.
In addition, retail space per capita in the USA is 17 square feet, while in Asia it is 7 square feet and in the MENA region is less than 2 square feet. The Indian subcontinent is a fraction of one square feet. The market thus is ripe for expansion and additional retail space will be a boon for mall developers, retailers and consumers.
“Besides affording the surrounding community with convenience, comfort and leisure enjoyment, shopping malls have the ripple effect of boosting the real estate value of both commercial and residential properties around them. From our experience too, we observe building new retail properties often give economies a shot in the arm by invigorating different industries including construction, property and tourism as well as helping to create new jobs,” Mr. Alabbar concluded.
Emaar Malls will fund its retail properties with part of the capital raised from Emaar Properties’ recent rights issue. The company is not ruling out other forms of financing besides using its own cash reserves.
Depending on the country and specific to each project, recouping the capital outlay would involve various income streams, including lease and rental fees. Where suitable, Emaar Malls may opt to co-own the retail properties with local partners.
