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Destination Insight – Phil McArthur

The Amazing Evolution of the Dubai Shopping Centre Industry

As markets and destinations around the globe are looking to re-invent themselves to attract retail and tourism investment, Phil McArthur, Founder and Chairman of McArthur Retail Development Specialists, a renowned leader in the retail real estate industry having provided strategic assistance to over 150 developers in 22 nations, shares with us an insight into how one of the world’s most well-known destinations has evolved to be a global leader.

Destination Insight - Phil McArthur 1

As an industry veteran, I often look back to see how our business has expanded and transitioned during the past few decades. From the expansion of global brands to E-Commerce to the globalisation of the shopping centre business, our industry never rests.

One could argue that retail real estate is one of the largest industries in the world. If we also consider grocery and food retailing, physical bricks-and-mortar buildings are essential everywhere in the world for retailing.

During the recent Covid pandemic, the demise of physical retail was being touted by many. Now in 2023 we now know this prediction could not be further from the truth.

The creation of Dubai as a worldwide destination for tourism and commerce has been a marvel to witness. The role the shopping centre industry has played in Dubai growth has been strategic and aligned with the government’s vision of a modern city.

The Late Sheikh Rashid Bin Saeed Al Maktoum, Ruler of Dubai at the time, often said that “If it’s good for business, it’s good for Dubai”. This business-friendly policy has made Dubai the pre-eminent business and trading hub in the MENA region, and one of the premier business destinations in the world.

While Dubai lead the boom in retail development in the 1990’s and 2000’s neighbouring Emirates have also embraced the shopping mall culture. With difficult weather conditions in the UAE from April to October, shopping centres became the town squares for many communities.

The first shopping centre in the region was Al Ghurair Centre located in the heart of Deira. This 40-year-old property has expanded and renovated over the years and today boasts an excellent retail mix and strong customer traffic. Recent additions to Al Ghurair Centre include a world class family entertainment centre as well as a new urban food hall under development.

The opening of the first MAF mall, City Centre Deira in 1995 changed the mall industry forever in the MENA region. Developer Majid Al Futtaim had a modern vision to develop the first regional mall in the Middle East. Prior to City Centre Deira, most retailing in Dubai was high street and souk shops and the results were spectacular.

The vision of Majid Al Futtaim continued to deliver many successful shopping centres in the neighbouring Emirates of Sharjah and Ajman as well as expanding into other countries such as Oman, Bahrain, Lebanon and Egypt with strong shopping centre offerings.

One major driving factor of MAF’s expansion was the opening of Carrefour Hypermarkets and supermarkets in various MENA counties. From a humble start in 1995, MAF owns the rights to operate the brand in over 17 countries across the Middle East, Africa and Asia.

Today, Majid Al Futtaim operates over 375 Carrefour stores serving more than 750,000 customers daily and employing more than 37,000 people.
In November of 2005, MAF opened the Mall of the Emirates complete with an indoor ski attraction, two major hotels and over 600 shops. Today this property is considered one of the most successful super regional malls in the world. The Mall of the Emirates set a new standard for merchandise mix and its fashion selection included a wide range of luxury brands. The mall also was the first to have direct access from Sheikh Zayed Highway into the mall parking area.

Not to be outdone by MAF, in November of 2008, the Dubai Mall opened. This massive project was lead by another real estate development visionary, Mohamed Alabbar, the Chairman of Emaar Properties. Mr. Alabbar had developed his skills working for the Government of Dubai and was a shopping centre manager based in Singapore early in his career.

Located in the $20bn Emaar master planned community of Downtown Dubai, The Dubai Mall further guaranteed Dubai’s position as a shopping capital of the world. The Dubai Mall opened with over 1,300 shops and services and featured an indoor aquarium, The Dubai Fountain as well as The Burj Khalifa, the tallest building the world. The Dubai Mall has also expanded twice and today features 350,000m of rentable area.

Dubai can be considered one of the best markets in the world to study and understand the retail and shopping centre industry. Not only does Dubai have over 10 super regional malls, but the city also hosts over 100 retail destinations of various typologies including neighbourhood and community malls, lifestyle centres such as City Walk and waterfront retail promenades located in Jumeirah Beach Residences (JBR) and the Beach. Many of these smaller centres serve a local target audience while others have become strong F&B destinations.

The contribution of Dubai’s shopping centres to the overall economy and tourism boom cannot be underestimated. Today over 15 million visitors and tourist visit Dubai.

Sheikh Mohammed Bin Rashid Al Maktoum, Vice President of the UAE and Ruler of Dubai has hailed the UAE tourism sector’s post-pandemic revival and underlined the country’s ambitions to attract 40 million hotel guests by 2031. Sheikh Mohammed has recently set out the UAE’s plans to establish the “best and most active economy in the world.”

Dubai has positioned itself as a leading hub for transportation and trade, over 85 million people travel through Dubai airports making it one of the busiest airports in the world.

Boasting a safe modern city, with superior infrastructure, Dubai has developed an excellent recipe for success as a global destination.

The role the shopping centre industry has played in the growth of Dubai is nothing short of phenomenal. Dubai’s economy is traditionally fuelled by retail and the mall phenomenon. Currently, wholesale and retail provide approximately 29 per cent of gross domestic product.

The UAE is home to over 200 nationalities. Emiratis constitute roughly 11.6 per cent of the total population, making the UAE home to one of the world’s highest percentage of expatriates. Indians and Pakistanis form the largest expatriate groups in the country, constituting 28 per cent and 12 per cent of the total population respectively.

From its humble beginnings as a natural harbour and centre of maritime trading activity on the Arabian Gulf, Dubai has created a modern city with ultra-modern transportation networks, world-class hotels and a vibrant home for people from around the globe.