September 24, 2018

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Central Perk

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Gulf Related is making steady progress on a retail destination that should breed new life into downtown Abu Dhabi. Jason O’Connell writes.

One year into construction and the Al Maryah Central shopping mall in downtown Abu Dhabi is taking shape. Anchored on one side by the first Macy’s department store outside the United States and on the other by the second Bloomingdales in the UAE, the $1.05bn project will connect to the existing Galleria Mall to form a 2.8 million square feet shopper’s paradise, equivalent in size to Dubai’s Mall of the Emirates.

This will be the retail element of a larger, mixed-use waterfront development on Al Maryah Island that includes the existing Rosewood and Four Seasons hotels plus the city’s Central Business District (CBD) and the Cleveland Clinic next door. Plans for a pair of towers, one of them containing a hotel, have reached an advanced stage.

Gulf Related, a joint venture of Gulf Capital private equity group and New York-based Related, one of the largest private real estate companies in the US, is developing the project, its second after the high end Galleria Mall next door.

The company broke ground on site in November 2014 and excavated 160,000 m2 in the space of five and a half months, says Andrew Tonner, senior vice president Project Management at Gulf Related. Securing permits early allowed the company to proceed with works such as piling (950 piles), which was carried out by NSCC and the shoring which was done by Bauer construction.

In the meantime Gulf Related concluded a tender process and selected Multiplex as the main contractor in August this year. The Australian company is now 12 months into a 33 month schedule and is overseeing around 20 subcontractors. Handover is expected in January 2017 allowing for an 11-12 month fitout period before the mall opens to the public in March 2018.

Around 6,000 workers are currently onsite which is expected to swell by a further 2,000 at the fitout stage. Tonner says progress has been relatively smooth so far but will get more complicated once fitout gets underway for the 400 tenants that will eventually move in. Handover of the two department stores is set for January 2017.

“That’s where the bigger headache is, in the retail mall and that’s where the lessons learned from the Galleria and the experience in our team comes to bear. We know where the challenges and pitfalls are and we’re prepared to deal with this,” says Tonner.

“For instance we’ve already chatted to the Municipality about early permitting for tenants to get them in ahead of time and make sure their designs are approved and they can get the contractors appointed so that when we’re ready to let them in they can come straight in.

“We’ve maybe 50 or 60 fitout guys that interact with the tenants. If you imagine 400 tenants it’s a huge exercise in terms of getting all these guys design approved. And then there’s the authority approval and site logistics.”

Market Mechanics

Does Abu Dhabi really need another mall? After all, anyone that has visited the Galleria can’t fail to have noticed that it’s not the busiest shopping destination around. But its developers insist that Al Maryah Central is targeted at a different demographic altogether while its downtown location should give it the edge over competitors.

The sheer variety of what’s on offer also means there will be something for everyone. For example, it will have Family World and Sport World, two destination retail parts of the shopping centre on the roof with lots of outside space.

“It’s more urban than most projects of this kind, sitting right in the immediate density of downtown,” says Kevin Ryan, chief operating officer & managing director, Gulf Related. “There are 13 bridges on this island (6 open right now) so connectivity is very good.

“The Galleria is the luxury section of this combined set of projects and there’s 15 waterfront licensed dining venues. That’s a big differentiator compared to, for example the major shopping malls in Dubai. It’s very upscale in terms of its finish but the leasing mix is mid to upper level. Luxury stays in the Galleria. We’re also spending quite a bit of money on the outside of the building to make sure it’s very appealing in this environment which is the new central business district.”

Ryan says the four storey department stores at either end of the building will help attract a wide variety of visitors to the mall as each one occupies a different space in the retail market. Gulf Related managed to lure Macy’s and Bloomingdales as anchor tenants for the development thanks to its close relationship with Al Tayer Group, which holds the local license for both brands and is also one of the largest tenants in the Galleria. This is Al Tayer’s second Bloomingdales in the UAE following the Dubai Mall and the Al Maryah store was designed to the group’s specifications.

“At the time that we launched this project Al Tayer Group was in the process of getting the Macy’s license. Macy’s Inc is the parent company for both Macy’s and Bloomingdales. Macy’s is well known as being value driven, with lower price points and a lot of their own brands. Bloomingdales sits higher up. Between the two they cover mid-market merchandise all the way up to luxury.”

Abu Dhabi has been harder hit than Dubai by the drop in oil prices in the past couple of years. Is Ryan concerned about the dip in market conditions?

“It is more challenging,” he admits. “Things have slowed down a little and maybe we have to negotiate a little more tightly. But because of our location we think we should be market dominant due to location, quality of anchoring and the fact that it’s part of a mixed use development with good access. So in general our outlook is still pretty positive. And also we’re not opening for two years.”

Ryan is sticking firmly to the opening date of March 2018. “There are always challenges, particularly in this region, but we did open the Galleria on time so it’s our goal to repeat that again,” he says.

Al Maryah Central is now 50 percent leased, with over 785,000 square-feet of signed leases. As well as Al Tayer Group leading retailers Dubai Holding, Majid Al Futtaim, Chalhoub Group have signed up a number of their brands and there will also be a 21 screen multiplex by VOX with IMAX.

The Two Towers

Gulf Related plans to issue separate tenders for a pair of towers that will be part of the same complex as the mall and the CBD. One of the buildings will offer 225 luxury apartments while the other will contain a 200 key five star hotel and 150 serviced residents.

“We’re in the early design stage for both towers in the north and south corners and looking to procure a contractor by the end of the year,” says Ryan. “We view them as separate projects because they’re independently financed. We’ll have different investor groups and probably different contractors for each tower. We’ve put retail in the bases so it plugs into the shopping centre.”

With a combined development cost of around $480mn, Gulf Related expects to complete financing for the 400,000 sq ft buildings by the end of this year, finalise design in 2017 and complete construction of both towers in 2020.
Though Gulf Related plans to do more projects in the region, Ryan says it will probably focus on quality rather than quantity and shift its attention more towards the residential sector.

“There’s not that many more opportunities for more shopping,” he says. “We think there’s room for Al Maryah Central but probably not for another one of this scale in Abu Dhabi. But what happens is if you do good projects they have a tendency to generate business for you. So doing the Galleria turned out well the way it did.”

 

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