Retail

Qatar needs big premiums over UK asset plans

Qatar will have to charm demanding shareholders and stump up a big premium if it wants to add London business district Canary Wharf to a UK investment shopping spree as the capital's prime office market rebounds. Qatar Investment Authority's (QIA) chances of making a successful tilt for the 76 per cent of Songbird Estates it does not own rests with New York investor Simon Glick with 23.95 per cent of Songbird, China Investment Corp (CIC) with 14.7 per cent, and Morgan Stanley with 3.1 per cent. The stake is likely to carry a price tag of £700-850 million (US$1-1.3 billion). One top-10 investor valued Songbird at more than 200 pence a share, said a report in our sister publication, the Gulf Daily News. Sources said a bid from the sovereign wealth fund, with 23.96 per cent, could be pitched to secure a 75 per cent stake in Songbird to force a delisting, or be rich enough to achieve 90 per cent acceptances, allowing it squeeze out minority holders. QIA should be making a statement about its Songbird stake shortly. Any move would follow Qatar's recent London purchases of department store Harrods and the Park House development on Oxford Street, a major shopping corridor. In either scenario, the trinity of majority shareholders represents a large blocking stake. Experts said winning these stakeholders around could be Qatar's toughest test.

Qatar: Retail on a roll

While the acquisition of iconic British department store Harrods in May by Qatar Holding - one of the government's investment vehicles - made international headlines, the country's domestic retail sector is also very much on the move. Though impressive in themselves, the spate of new developments are less likely to catch the attention of the global media than the US$2.2 billion Harrods deal, Qatari shoppers are set to benefit from a major increase in retail options, some of which will rival the Knightsbridge emporium for opulence and range. In the coming years a massive building surge is expected to add up to 400,000 sq meters of retail space to the existing stock, almost doubling the gross leasable area (GLA) in Doha. Qatar has among the highest retail rental rates in the Gulf region, due to the current gap between supply and demand, with new complexes quickly finding tenants as a result of the ready-made demand existing for retail space, the Alpen report said. "However, the current robust project pipeline - once completed - will bring some correction in demand/supply mismatch, thereby moderating the rental rates during the coming years. Moreover, as the majority of construction is in premium category malls, a drop in rentals could be more accentuated in this segment," the study said. The projected increase in retail GLA is already having an impact on the sector, with rental charges for shopping space falling by 13-23 per cent in the first three months of the year, according to a recent report by international consultancy DTZ. (Source:OBG)

Syria: Retail regeneration

A burgeoning middle class, strong economic growth and the positive effects of market liberalization are combining to create a retail renaissance in urban Syria, prompting a flood of foreign brands and overseas investment to the country. The latest predictions from the Central Bank forecast growth for Syria's economy at a robust 5 per cent this year, up from 4 per cent in 2009. According to Central Bank governor, Adib Mayaleh, the majority of this growth will be generated from finance, services and tourism - all white-collar sectors benefitting from the government's ongoing liberalization policy. Inflation is also set to fall to 3 per cent, down from 4 per cent in 2009, which will help further encourage middle class consumption. As if to emphasize the heightened purchasing power among elements of Syria's bourgeoisie, new brands and tastes are rapidly finding their mark in the local marketplace. Luxury German brand Porsche was introduced in Damascus last month by Karkour Trading, the Syrian dealership for Volkswagen Group. Even exotic fare like sushi has been making a splash among the moneyed elite in the capital, with chains such as Lebanon's Sake opening branches in Damascus. For those with the access and the spending power, the variety of retail opportunities in Damascus is expanding apace and in some respects offers a domestic alternative to Beirut, where well-heeled Syrians have traditionally gone to shop. Even electronic retail is beginning to take off - the country's first online grocery store registered 2000 clients in its first three months, according to Syria Report, a local economic periodical. To accommodate this increased demand, investors from the Gulf in particular are looking to establish new, air-conditioned retail spaces in and around the Syrian capital. The Dubai-based Majid Al Futtaim Properties (MAF) announced at the start of May that it would be investing US$3.5 billion across the Middle East on four new shopping malls. Of the four announced, the largest gross leasable area (GLA) was reserved to the proposed Mall of Syria, to be located on the outskirts of Damascus. The Mall of Syria is expected to have a GLA of 200,000 sq meters and is due to open in 2014. International architecture firm Callison announced it would be providing the designs for the mall, which will form part of a larger, mixed-use project expected to total 1.5 million sq meters. (Source: OBG)