Gulf Related chief bullish on prospects for Al Maryah Central despite market slowdown

Michael Fahy

Developer Gulf Related is bullish about the prospects for its US$1 billion Al Maryah Central development after announcing that 50 per cent of the retail space within the 2.8 million square feet project has already been let.

Ken Himmel, the company’s co-managing partner, yesterday acknowledged that as a result of the recent slowdown in the marketplace, it had “tempered some of our projections” for the mall’s performance from 2018-20.

However, he argued that Al Maryah Central had a low debt-to-equity ratio of about 50 per cent, and said that developers of competing schemes may find it difficult to get their projects off the ground.

He said that when forecasting sales, “we factored in what was a consistent amount of competition that was getting unleashed in the region.

“I really believe that’s going to stop. The supply side none of us have any control over, but one thing we know is that supply is not going up.”

Mr Himmel said that Gulf Related has about 125 people from its own firm working on Al Maryah Central, and that there are a further 4,000 people on site working either for contractor Brookfield Multiplex or its subcontractors. He expects to hand over the two anchor department store units – a 205,000 sq ft ­Macy’s and a 230,000 sq ft Bloomingdale’s – by the middle of next year for fit-out. The remaining retail units will be ready for fit-out by the end of next year, with the mall due to open in August 2018 – five months behind its initial completion target.

He expects a 230-unit residential tower on the north of the site, above Macy’s, to be complete within 12 months of that, and a hotel and luxury serviced residences building above Bloomingdale’s to open in 2020.

“Sometime by mid-2017 we’ll pick up on the hotel. Now is not an easy market to get financing for a hotel – it’s challenging. So the story here has to be a pretty spectacular to put all of that together.”

Despite this, he said an agreement is ready to be signed with W Hotels to manage a 225 to 250-unit hotel within the tower once it is ready to progress.

Gulf Related also announced deals for a series of licensed restaurants at the adjoining Galleria Mall, which is currently 100 per cent let. New venues will include a La Petite Maison, Roberto’s, Coya, Nusr-Et, Sawar and a Loca outlet, and Mr Himmel said that the mall was undergoing a “realignment programme” with more luxury brands moving into The Galleria, and mid-tier retailers moving to Al Maryah Central instead.

He said that contrary to popular belief, the luxury market was still performing well. “Literally, the best performing retail anywhere in Abu Dhabi is luxury at The Galleria. We’re seeing growth for some of these tenants at 15-60 per cent, year-on-year. And many of the brands that are in the luxury category are looking to double in size.” A report commissioned by Gulf Related from Australian retail consultancy Urbis stated that the Abu Dhabi retail market will be worth $12.18 billion by 2018 and $13.67bn by 2020.

Mr Kimmel said he expects that it will be able to grab a share of at least 20 per cent of this, and that its mall will be the only one to open in 2018, despite Reem Mall’s owner forecasting an opening date at the end of that year. It named Al Fut­taim Carillion as the preferred bidder for its $1bn, 2 million sq ft mall in July.

“Someone would have to be exactly where I am to open in ’18. Look around – tell me who is where I am? Nothing has even started.”

A Reem Mall spokesperson said: “Construction of Reem Mall is continuing in line with the project timetable and further project announcements will be made in due course.”

mfahy@thenational.ae