Oman Retail Market Set for Significant Change

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The four largest malls in the Omani capital account for 40% of the total gross leasable retail area across the city: Muscat City Centre, Markaz Al Bahja, Muscat Grand Mall and Qurum City Centre. The retail sector in Muscat is, however, about to witness significant expansion, with a strengthening pipeline of shopping mall developments.

Of the larger malls currently under construction in Muscat, The Avenue and Panorama Mall, both of which are in Bausher and the dedicated military personnel mall in Mawaleh are together expected to increase the supply of larger scale retail mall space over the next two years by over a third. In addition to this, there are currently proposals for three further mega malls, which would be vast retail destinations in their own right, akin to what is already on offer in Dubai. These include Majid Al Futtaim's 'Oman Mall' in Bausher, the Al Futtaim Group's 'Muscat Festival City' in Airport Heights and Al Jarwani Group's 'Downtown Muscat Mall' in Mabellah.

In an increasingly congested and competitive retail landscape, a clear understanding of the consumer target market and well-matched tenant mix will be the key to success for Oman's growing list of malls. Our experience shows that higher-end luxury brands have thus far been unsuccessful in Oman. This is linked to the relatively low levels of disposable income in the Sultanate, when compared to its Gulf Cooperation Council (GCC) peers.

Achieving the appropriate balance between luxury and "regular" retailers will be central to the success of Muscat's new shopping malls. This was recently evidenced by the tenant reconfiguration exercise undertaken at Markaz Al Bahja. A shift away from high end retailers, with a focus on more "value brands" helped to drive a significant uplift in the mall's footfall.
In addition, we have found that an anchor supermarket/hypermarket retailer almost guarantees a high footfall across the rest of the mall as well. This is a well tried and trusted technique across the wider GCC.

Away from Muscat's larger malls now looming, an emerging niche sector that we expect to grow rapidly are neighborhood malls. The development of these smaller community shopping malls has been limited to date, however the scope for a number of these, in the region of 3,000 to 10,000 sqm, bolted on to existing residential communities is tremendous. The car culture prevalent in much of the region means that malls are often a car journey away, so being able to service the needs of immediate surrounding population groups will almost certainly ensure the success of smaller retail schemes.