3 minute read
Riyadh Retail Market
Anthony’s role at grmc is to ensure value-enhancing initiatives are delivered successfully to clients across multiple industries. He oversees macroeconomic research and business advisory projects covering the GCC and the broader Middle East. Anthony brings a sound understanding of regional retail markets, economic growth, development trends and public policy initiatives.
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The retail landscape in Riyadh has experienced a significant transformation over the past few years and will continue to do so. The total retail gross leasable area (GLA) in Riyadh currently stands at over 6 million sqm, of which street retail constitutes around 63%. Of the mall-based leasable area of 2.3 million sqm, only a fifth (~480,000 sqm) of it can be categorized as Grade A, which is a high-quality retail space that commands premium rental rates.
Modern format retail GLA in Riyadh is anticipated to grow from circa 2.3 million sqm in 2022 to over 3.8 million sqm by 2027. The primary driver of growth in modern format retail GLA is due to the supply of super-regional malls (malls with a GLA above 75,000 sqm), including Mall of Saudi, The Avenues, Jawharat Arriyadh and Al Wedyan. The quality of retail space is also likely to be enhanced as consumer expectation of retail evolves. Consumers today are well travelled and are exposed to novel retail, leisure and entertainment concepts across the UAE, Europe, and the US. The world is now a much smaller space. Unless malls in Riyadh offer a superior level of experience, retail spend would continue to leak to international markets. The pandemic-induced acceleration of e-commerce is drawing traffic away from physical retail locations. Differentiation in the retail offer with better quality and variety is critical, as there is a growing appetite for international brands already available in wellestablished markets in the region.
ANTHONY CAPPALONGA
COMMERCIAL MANAGER grmc ADVISORY SERVICES
The landscape of retail in the UAE continues to mature and new developments are outpacing the rate of growth in population, due to which these developments are largely dependent on tourists. This will push global retailers in the region to explore potential opportunities in high-growth markets that are relatively stable such as Riyadh. In comparison to other markets within KSA, Riyadh has a higher retail GLA per capita at 0.3 sqm. However, it lags behind regional leaders like Dubai (1.3 sqm per capita) or even Bahrain (0.6 sqm per capita). Regionally, Riyadh trails not only in overall GLA per capita metrics but also in the quality of the offer. Among existing superregional malls in Riyadh, only a limited selection of malls can be considered Grade A assets. Of the larger malls, there are few that fall within the “lifestyle” concept or are pushing the boundaries when it comes to their experiential offering. The nature of retail markets in the Middle East differs significantly from those in the rest of the world in
many aspects and with consideration of the semantics at play, however probably the most pertinent with regards to making commercial and industry-based decisions is the lack of any definitive clarity or transparency on the reporting of sales or sales related data. A key focus area for developers is to understand the characteristics of their specific catchment area, which is where they derive a majority of their footfall, and consequently sales (trade area – yes, it is different to a catchment area!). This can be used to drive development decisions pertaining to sizes, retail mix, brands, etc, which should ideally be aligned with the needs of the target audience. This is precisely where grmc’s expertise lie, operating for over two decades in assisting our clients with mall feasibility projects, rollout & market-entry strategies, geo-spatial mapping, benchmarking and developing proprietary gravity and regression models.
