New malls to help diversify economy

07 August 2013

An expanded service sector will be crucial to generating non-oil gross domestic product for governments

When the world’s largest shopping mall opened at the end of 2008, it was at the height of the global credit crunch. In those early months, employees almost outnumbered customers. Fast-forward four years and footfall at Dubai Mall has risen to 65 million a year.

As the emirate’s economy rebounds, driven by a tourism sector that is welcoming record numbers of visitors, even the world’s largest shopping mall is starting to feel overcrowded. It reflects Dubai’s success in establishing itself as a retail destination and is a model that other countries in the region are hoping to emulate.

Across the Middle East and North Africa region, about $16bn of mall developments and expansions are planned or under way. From Abu Dhabi to Cairo, developers are hoping to cash in on the demand for new shopping experiences from an expanding population and emerging middle class.

As happened in Europe and the US decades ago, the new malls will change the retail landscape, edging out the traditional, smaller retailers. While that may be lamentable, there are many practical reasons for favouring giant shopping complexes in the Middle East, not least the inhospitable climate. As governments look to diversify their economies away from hydrocarbons, an expanded service sector is an important way of generating non-oil gross domestic product. The malls built today will become important cogs in the economies of tomorrow.

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