Mall and leasing managers need to develop new strategies to reduce the impact of vacancy increases and downward pressure on rental rates as some markets in the GCC will see an expected short-term oversupply of lease-able area by end of the year, according to an expert.

“There is going to be a clear slowdown in upcoming projects, however, this could be of benefit for the retail market to look back, being able to focus more on existing shopping malls and taking the opportunity to develop these even more,” said Maher Al Shaer, President of the Middle East Council of Shopping Centres (MECSC). “It is expected that the GCC economy will only have a two per cent slowdown in purchasing power parity in 2009, with room for recovery in 2010, but there will be increased competition within the existing markets.”

Despite the global economic slowdown, a report titled Booming Retail Sector in the UAE by RNCOS, an industry research firm, projects total retail sales in the country to grow at a compounded annual growth rate of about 12 per cent from 2008 to 2011.

Analysts name Saudi Arabia as the GCC country with the best retail opportunities in the current situation.

A two-day workshop, to be held on April 8 and 9 at Burjuman Rotana Suites, will mainly focus on how the various leasing functions need to act and react in the current tough economic conditions.

Walter Kleinschmit, workshop facilitator and one of the founding members of MECSC, said: “This is not a buyers’ [tenants'] market, it is a tough market for both the landlord and the tenant. Difficult times are the best to grab market share and increase customer loyalty and support.

“It is a good time for shopping malls to diversify their retail offering. A mall that is doing better than average will attract retailers who also want to take advantage of the difficult times to refine their offering.”

(Published on http://www.business24-7.ae on March 16, 2009)