Mideast's largest mall operator to expand amid vaccine hopes

The retail scene is looking up in Dubai. (AP)
The retail scene is looking up in Dubai. (AP)
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Updated 15 April 2021

Mideast's largest mall operator to expand amid vaccine hopes

Mideast's largest mall operator to expand amid vaccine hopes
  • Employs some 43,000 people regionally
  • Revenue fell 7 percent to $8.9 billion last year

DUBAI: The Middle East's largest operator of malls expects revenue and earnings to climb back to pre-pandemic levels by the end of next year and is moving full steam ahead with plans to develop its biggest mall ever.
In a wide-ranging interview with The Associated Press on Thursday, Majid Al Futtaim CEO Alain Bejjani said business is steadily rebounding amid vaccine rollouts in some countries of the region, kicking 2021 off to a relatively strong start.
“We’re not out of the woods across the markets, but things are improving,” Bejjani said. “Going back to the pre-pandemic levels— to 2019 level— in my opinion, will happen by the end of 2022 in terms of financial results."
The company's plethora of retail and leisure holdings include the iconic Mall of the Emirates in Dubai, hundreds of VOX cinema screens and more than 350 Carrefour grocery stores in the Middle East and beyond. Named after its Emirati billionaire founder, the company's largest markets are the United Arab Emirates, Saudi Arabia and Egypt, but its reach extends as far as Pakistan, Kenya and Uzbekistan.
The company's projections of a rebound and its plans for expansion reflect the faster than anticipated recovery of Middle East economies from the coronavirus pandemic, though uneven vaccine distribution remains a concern.
Majid Al Futtaim, which employs some 43,000 people regionally, saw its revenue fall by 7 percent to $8.9 billion last year and earnings drop by 19 percent to around $1 billion due to coronavirus lockdowns and restrictions. The hardest-hit side of the business was its leisure and entertainment arm, where revenue fell by 49 percent to $380 million and earnings plummeted by 122 percent, resulting in losses of $25 million.
Despite last year's slump, Majid Al Futtaim plans to unveil 30 new movie theater screens this year in Saudi Arabia, is developing it’s biggest mall project ever in Riyadh, and is opening what will be the largest mall in Oman at the end of 2021.
“Every country has had their own set of challenges to deal with. The reality is the fastest recovery is the UAE... and we expect very fast recoveries in other markets like Saudi Arabia,” Bejjani said. “We have also seen Egypt being very resilient.”
The United Arab Emirates has rapidly rolled out COVID-19 vaccines, which are free of charge for citizens and residents. Saudi Arabia is also expanding its vaccination rollout and has offered all residents free coronavirus treatment since the start of the pandemic.
It's not back to business as usual just yet, though. Majid Al Futtaim— like many businesses globally— is having to adjust to new realities, including the potential imposition of so-called “digital passports." In Bahrain, for example, where Majid Al Futtaim operates 30 cinema screens, only people who've been vaccinated or recently recovered from COVID-19 will be allowed into cinemas, gyms and other select spaces soon.
Bejjani said the company is “very supportive of any measure” that gives customers the feeling of being safe.
“Whenever there is an additional regulation, that actually gives people even more certainty, I think this is a plus, whether it is the vaccine passport, whether it is something else,” he said. “At the end of the day, what’s important is that people want to go back to normal. People want to go back to consumption.”
The company's rapid growth and expansion since its inception in 1992 mirrors that of its home base of Dubai, where a frenetic construction boom has transformed it from a fishing village into one of the most talked about modern cities in the world. The company's economic rebound is also closely tied to that of Dubai's, where the International Monetary Fund expects the country's overall economy to grow this year by 3.2 percent.
At the height of the pandemic last year, Dubai imposed a 24-hour curfew and government-mandated permits were needed to leave the house. Even then, Majid Al Futtaim's Carrefour supermarkets remained busy.
Because the United Arab Emirates imports most of its produce, meat and poultry, Majid Al Futtaim’s policy of stockpiling a three months’ supply of basic goods proved crucial when nervous shoppers in Dubai rushed to stock up on goods during the first days of growing restrictions on movement.
In the wake of 2020, Bejjani said the company is in conversation with the government of the UAE to increase stockpiles of certain products up to six months. The company is also working with 6,000 local farmers to increase production of fruits and vegetables, while also supporting farmers as far away as Kenya to ensure a diversified supply of fresh food for its UAE stores. A half dozen Carrefours in the UAE began growing their own lettuce and herbs in hydroponic farms last year, Bejjani said.
The company's Carrefour business across the region saw earnings grow by 14 percent to $440 million last year, even as revenue slightly fell. That was due in part to the company's overall 188 percent increase in online sales as people moved toward grocery delivery services.
By the end of last year, the company also saw more visitors returning to its malls and cinemas.
Majid Al Futtaim’s crown jewel in Dubai is the Mall of the Emirates, home to an indoor ski slope and the world’s busiest Carrefour supermarket. A recent walk through the mall showed it's cafes, restaurants and stores teeming with visitors. Still, there were also many shuttered storefronts - evidence of the economic slowdown that had hit Arab Gulf oil exporting nations even before the pandemic.
The region's many sprawling luxury malls aren't just for shopping, though. They offer an escape for millions of people seeking respite from the long summer months. Bejjani said despite some store closures across its malls, there continues to be “big demand” in the Gulf for more entertainment and retail spaces.


Rising consumer appetite for digital payments in Saudi Arabia

Rising consumer appetite for digital payments in Saudi Arabia
Updated 12 May 2021

Rising consumer appetite for digital payments in Saudi Arabia

Rising consumer appetite for digital payments in Saudi Arabia
  • The survey found that 94 percent of respondents are comfortable with digital payment systems such as biometrics, digital wallets and QR codes

RIYADH: Statistics released this week have highlighted the massive surge in the uptake of digital payments in the Kingdom, especially in light of pandemic restrictions on shopping and travel.

According to monthly data issued by the Saudi Central Bank, there were 25.84 million online sales transactions through the Mada system in March. The total value of sales during the month was SR 5.31 billion ($1.4 billion), a year-on-year increase of 196 percent.

The Small and Medium Enterprises General Authority (Monshaat) also reported that the e-commerce sector received an investment of around SR 250 million during the first quarter of 2021, according to an article by the Al-Eqtisadiah newspaper.

With shoppers having few alternatives when it comes to getting basic necessities, it is no surprise that the first-ever Mastercard New Payments Index for the Kingdom found widespread acceptance of digital payments among Saudi consumers.

The survey found that 94 percent of respondents are comfortable with digital payment systems such as biometrics, digital wallets and QR codes.

A year into the pandemic, research from Mastercard showed that the adoption of new payment technologies is rising and consumer appetite for it growing fast.

According to the index, 68 percent of respondents tried a new payment method they would not have tried under normal circumstances.

In addition, 92 percent of Saudi consumers said they have access to more ways to pay compared to this time last year.

Three-quarters of respondents said digital payment methods help them save money, while the same amount also said they are more loyal to retailers who offer multiple payment options. Sixty-nine percent of Saudi consumers said using biometrics to verify purchases made them feel safer.

“More than ever, consumers in Saudi Arabia are adapting and embracing payment innovations. Businesses, both big and small, must respond to this evolving trend. We are closely working with our partners and retailers to deliver secure and diverse payment technologies for the omnichannel generation,” J.K Khalil, country manager, Saudi Arabia, Bahrain and the Levant at Mastercard, said in a press statement.


Latest reforms will boost KSA real estate, says analyst

Latest reforms will boost KSA real estate, says analyst
Updated 12 May 2021

Latest reforms will boost KSA real estate, says analyst

Latest reforms will boost KSA real estate, says analyst
  • The support for the housing sector will help the government achieve one of its core Vision 2030 goals to reach 70 percent homeownership by the end of the decade

RIYADH: The Saudi government’s recent announcements in the real estate sector, including providing more than 53,000 new homes in Riyadh and relaxing the ban on ownership by non-Saudis in Makkah and Madinah, will help to overhaul the sector and reach the Kingdom’s Vision 2030 home ownerships goals, according to an industry figure.

“The announcement of the allocation of 20 million square meters of land in the northern Riyadh suburb of Al-Jawan, effectively trebling the size of this neighborhood, to housing developments will certainly aid the government’s home ownership targets,” Faisal Durrani, head of Middle East research at real estate consultancy firm Knight Frank, told Arab News.

He added that the announcement by Crown Prince Mohammed bin Salman “follows the December announcement by Roshn to develop 30,000 residential units in Riyadh — 4,000 in the first phase — as part of a national program to deliver 1 million new homes by 2030.”

The move is also in line with the city’s aim to become one of the 10 largest economic cities in the world and to increase its population from 15 to 20 million by 2030.

The support for the housing sector will also help the government achieve one of its core Vision 2030 goals to reach 70 percent homeownership by the end of the decade, up from 47 percent four years ago and around 60 percent at present.

The decision late last week to allow companies listed on the Saudi Stock Exchange to own properties in Makkah and Madinah was also seen as a major move by the government to encourage foreign investment and to permit non-Saudi investor ownership in the prime markets.

“Opening ownership in Makkah and Madinah to international companies is a clear indication of the direction of travel of the Saudi economy and is perfectly aligned with Vision 2030,” Durrani said, adding: “The landmark change is likely to pave the way for a boost in demand for commercial real estate over the medium to long-term, as businesses are drawn to the emerging economic opportunities.”

Such moves by the government are likely to be a catalyst for a post-pandemic rebound in the Kingdom’s real estate sector, which are already up 25 percent year-on-year (Y-o-Y) in Riyadh during the first quarter of this year, and 34 percent Y-o-Y in Jeddah and 11 percent Y-o-Y in the Dammam Metropolitan Area.


Airbus tells suppliers to plan for 18% output hike in 2022

Airbus tells suppliers to plan for 18% output hike in 2022
Updated 12 May 2021

Airbus tells suppliers to plan for 18% output hike in 2022

Airbus tells suppliers to plan for 18% output hike in 2022
  • The tentative new goal would lift output of the workhorse domestic and medium-haul jet

PARIS: Europe’s Airbus is asking suppliers to get ready for a further 18 percent increase in A320-family jet output during 2022, on top of existing targets for this year, as airlines ready for a partial return to normal travel, industry sources said.

The tentative new goal would lift output of the workhorse domestic and medium-haul jet, which competes with Boeing’s partially grounded 737 MAX, to 53 a month, they told Reuters.

The number being floated for end-2022 remains informal and Airbus has only committed so far to raising output in two steps to 45 a month by end-2021 from 40 now.

But it is the first concrete indication of the shape of recovery Airbus hopes to achieve for its main single-aisle jets next year as it restores coffers depleted by the pandemic.

“We do not comment on speculation regarding the longer-term trajectory,” a company spokesman said.

“We see the market recovering to pre-COVID levels in the 2023-2025 time frame, with single-aisle recovering first,” he said, adding, “uncertainties remain.”

Airbus, which had been enjoying record jet demand before the virus triggered widespread travel bans, cut output of its best-selling model by a third to 40 a month around a year ago.

In January, it announced plans to increase output to 43 a month in the third quarter and 45 a month in the fourth.

CEO Guillaume Faury said last month Airbus aimed for a “steep ramp-up” in 2022 and 2023, without elaborating.

Some suppliers have warned of bumps ahead in restoring pre-pandemic production as smaller parts makers struggle with cash shortages. Airbus must also address industrial snags that held up dozens of deliveries even before COVID-19, they say.

Output of larger wide-bodied jets remains depressed by travel restrictions and is not expected to recover soon.


Lebanese drivers queue for hours as fuel crisis worsens

Lebanese drivers queue for hours as fuel crisis worsens
Updated 11 May 2021

Lebanese drivers queue for hours as fuel crisis worsens

Lebanese drivers queue for hours as fuel crisis worsens
  • Some stations rationed the amount of fuel sold to customers, mostly taxi drivers

BEIRUT: Motorists queued for hours at gas stations across Lebanon on Tuesday as fears of an imminent end to the country’s subsidy on fuel increased demand for a commodity already in short supply.

Payment delays are also keeping urgent oil stocks on offshore tankers, meaning that many gas stations are facing critical supply shortages.

Queues extended into streets as drivers waited to fill their cars. Some stations rationed the amount of fuel sold to customers, mostly taxi drivers. Other stores closed down entirely.

However, Fadi Abu Shakra, representative of the union for fuel distributors and gas stations in Lebanon, said that the confusion and fear surrounding gas supply was “unjustified.”

He denied news reports that oil companies have notified distributors of an end to fuel subsidies.

Georges Brax, a member of the gas station owners’ syndicate, said: “The fact is, some stations have been running on very low fuel stocks due to the rationing of credits, which has forced some of them to close.”

He added that more stations will open their doors as soon as importing companies begin distribution, warning that the problem is not with importing companies or station owners, but with the Central Bank of Lebanon.

“It is necessary to speed up the opening of credits for ships that have reached regional waters, which have prior approval so that they can unload their cargo, thus easing market tension,” he said.

Brax added: “We have to get used to this reality, because for weeks we have been facing the same problem and the fuel has not been cut off.”

However, he added that, given the complexity of the issue, “in the short term, subsidies will not be lifted.”

But the panic of the Lebanese seems justified as subsidies on food and over-the-counter medicines are being gradually lifted.

Caretaker Finance Minister Ghazi Wazni has warned that Lebanon will “run out of money” to afford basic imports by the end of May if its remaining foreign currency reserves are not rationed.

According to Wazni, delays in launching the plan are costing the government about $500 million per month.

Bechara Asmar, head of the General Confederation of Lebanese Workers, said that there is “chaos in the markets and in all sectors,” and that “citizens are standing in queues in front of bakeries, fuel stations, supermarkets, shops and pharmacies to secure their daily needs.”

He added: “There is no plan yet to protect low-income people who can no longer afford their basic needs. Who is responsible? Is the Bank of Lebanon solely responsible? Or is it collusion between some merchants, importers, mafias, money whales and officials?”

Some of Lebanon’s fuel supply is also being smuggled to Syria.

An investigation by North Lebanon First Investigative Judge Samaranda Nassar revealed that “smuggling of fuel from the north into Syria in large commercial quantities through several smuggling lines has been going on for about two weeks.

“The new line passes through the town of Baino toward old Akkar, Al-Qamou’a, Hermel and then into Syria,” a report said.

Nassar issued 15 arrest warrants in absentia in six cases relating to fuel smuggling.

A gas station in the border area of Al-Arida was also closed after it was established that the owners “had filled tanks with fuel to be smuggled into Syria.”


Lebanon must fix debts, end prosecutor action or face power cut, says Turkish firm

Lebanon must fix debts, end prosecutor action or face power cut, says Turkish firm
Updated 11 May 2021

Lebanon must fix debts, end prosecutor action or face power cut, says Turkish firm

Lebanon must fix debts, end prosecutor action or face power cut, says Turkish firm
  • Turkey’s Karadeniz supplies electricity to Lebanon from power barges

ISTANBUL: Turkey’s Karadeniz, which supplies electricity to Lebanon from power barges, told Beirut to halt action by the Lebanese prosecutor to seize its vessels and said it must draw up a plan to settle arrears to avoid a cut in supplies, a spokesperson said.
The spokesperson for Karpowership, a unit of Karadeniz that operates floating power plants, was speaking on Tuesday after Lebanon’s Finance Ministry cited a lawmaker saying the country had been threatened with a cut to its supplies.
A Lebanese prosecutor issued a decision last week to seize the barges and fine the firm after TV channel Al-Jadeed reported corruption allegations tied to the power contract. The firm denies the charges and says it has not been paid for 18 months.