Majid al-Futtaim plans major UAE expansion

01 June 2016

The investment strategy will take company’s total investments in the country to AED48bn by 2026

Majid al-Futtaim Group, the Dubai-headquartered conglomerate whose portfolio includes shopping malls, retail and hospitality ventures, plans to invest AED30bn ($8.2bn) in the next 10 years in the UAE, which will take its total investments in the domestic market to AED48bn.

The investments include both new projects and the expansion of existing assets, which will create more than 170,000 direct and indirect job opportunities in the country, Alain Bejjani, chief executive of Majid al-Futtaim Holding told a press conference on 1 June in Dubai.

Majid al-Futtaim will develop 10 new shopping malls under the City Centre brand, including a new mall in Dubai. The development is part of a 740,000-square-metre mixed-use residential, retail, hospitality, commercial and leisure community.

The overall portfolio expansion will also see the company’s first mega mall in Sharjah, which will be adjacent to its existing Al-Zahia master-planned community. Majid al-Futtaim is likewise expanding the mall offering to UAE’s capital Abu Dhabi, starting with the development of a community mall in Masdar City, he said.

In line with its strategy to “keep assets fresh, relevant and best-in-class,’’ the company will undertake expansions of six of its 19 malls, including City Centre Ajman and City Centre Meaisem. The combination of new developments and expansions, will see the company’s total retail space in its mall portfolio in the country grow from the current 725,000 square metres to 1.5 million square metres, he added.

Majid al-Futtaim’s hotel portfolio will also grow by two thirds in the next 10 years through the addition of six new properties including hotels at Mall of the Emirates, City Centre Mirdif and at its planned mixed-use community in Dubai, on Sheikh Mohammed Bin Rashid Road in the emirate. This will bring the total number of keys operated to 4,800, with delivery of new hotels projects expected between 2019 and 2021.

“We are in an upward trend and I see positive signs. There are challenges, but we are not concerned with them,’’ Bejjani said of the concerns about oversupply of retail and hospitality space amid an economic slowdown.

Apart from the malls and hospitality projects, the company is further expanding its consumer finance business and introducing advanced healthcare clinics across the UAE. The expansion will also see the addition of 30 new Carrefour supermarkets in the next 10 years.

Once the UAE expansion is completed, Majid al-Futtaim’s portfolio will extend across asset classes to two master-planned communities, 19 shopping malls, 16 hotels, 101 Carrefour hypermarkets and supermarkets, 28 cinemas, 38 leisure and entertainment outlets, 86 fashion stores and 26 healthcare clinics.

Funding options

Securing funds to implement its plans will not prove to be a challenge for the company, according to Bejjani. Majid al-Futtaim is already speaking to financial institutions and will tap the debt market as and when necessary, depending on the market conditions and financing options available.

“All our projects are well funded and we are going to finance them according to our credit rating,” he said, adding that the company is not in the bond market at the moment but could tap it in “the next hours, next day or next month’’ depending on the needs.

The company, which has a credit rating of BBB, the highest among private firms in the UAE, has also put funding options in place for two of its flagship mall projects in Saudi Arabia. “We have revealed our plans in Saudi Arabia with timelines so continue to engage with the financial institutions and we will take advantage of the best [financing] opportunities,’’ he said.

Majid al-Futtaim is investing SR14bn ($3.7bn) to develop two new shopping malls in Riyadh. The company did not reveal funding details of the new projects in a February announcement.

The Mall of Saudi in north Riyadh is billed to be the kingdom’s largest shopping mall, with a total land area of more than 866,000 square metres, and will be home to an indoor snow park. City Centre Ishbiliyah is planned in east Riyadh and will be Saudi Arabia’s first City Centre mall. It will cover some 100,000 square metres of gross leasable area and will feature 250 stores, a 9,000-square-metre Carrefour hypermarket, food courts and an entertainment complex.

Majid al-Futtaim in March reported a 28.8 per cent increase in net profit on continuing operations, rising from AED2.6bn in 2014 to AED3.3bn in 2015. Its revenues rose by 8.2 per cent to AED27.3bn last year, while the group’s non-current assets reached AED45.9bn.

Stay informed when you are on the move

All MEED subscribers have free access to the MEED app. Download it today, available on Apple and Android devices

A MEED Subscription...

Subscribe or upgrade your current MEED.com package to support your strategic planning with the MENA region’s best source of business information. Proceed to our online shop below to find out more about the features in each package.