Retail Sector in Syria - Zawya

Retail Sector in Syria
Commercial Malls and Center
Alaa Alazem Jammal
March 2010
Page 1 of 17 Retail Sector Report March 31, 2010

Alaa Alazem Jammal
Independent Financial Consultant
BSc Finance, American University of Sharjah, UAE
Alaa Alazem Jammal has acquired six years of professional experience in Corporate Finance field
through her career as Financial Analyst in a major Telecom Corporation and a financial services firm
in Syria. Her skills include and not limited to: Developing budgets, financial reports & projections;
Assessing risks of different projects & companies; Interpreting and analyzing accounting & financial
data; and Utilizing computer software for analysis, reports, presentations, and archiving. In addition,
she has conducted several business plans, valuations, and financial reports for different clients in
several industries.
Mobile +963 98 80 80 864
Telephone +963 11 31 35 788
Email alaa.alazem@gmail.com
Page 2 of 17 Retail Sector Report March 31, 2010

Table of Contents
Real Estate & Construction .............................................................................................................................. 4
Retail Sector Analysis ........................................................................................................................................ 7
I. Market Boom: ...................................................................................................................................... 7
II. Demand for international brands: ................................................................................................. 8
III. Challenges: ....................................................................................................................................... 8
IV. Current & upcoming Shopping Malls in Syria: ..................................................................... 9
V. Proposed designs for some projects: .......................................................................................... 13
Page 3 of 17 Retail Sector Report March 31, 2010

Real Estate & Construction
Before discussing the Retail sector in Syria, we have to explore the current situation of real estate
and construction industry. According to Oxford Business Group report about Syria in 2009, the
supply shortfall for residential, office, retail and tourism real estate has fuelled both a surge in
construction and a rise in prices. For the residential sector, Syria’s population growth rate of 3%,
coupled with a large-scale influx of Iraqi refugees, contributed to housing shortages. The residential
market has traditionally been driven by the public sector and despite opening up to private
investment; the state is still very much the dominant player. By far the majority of demand is from
the affordable housing segment, although private developers mainly focused on the luxury projects
in 2008. A number of projects are in the works, many of which seek to offer an escape for wealthy
Syrians looking for homes outside Damascus. New developments include the Palmyra Real Estate
Development’s Jasmine Hills and Emerald Hills, the projects in Yafour and the Saudi Binladin
Group’s Palm Village in Sabboura. The residential market forms the backbone of Syrian real estate,
but there is also room for development of office and retail space. The shortage of office space has
made Damascus the eighth-most expensive city to rent in worldwide, but new projects should help
to add supply and bring down costs. As the economy has begun to open up retail has also become
an important segment, with increasing numbers of foreign brands entering the market. Consumer
demand is strong and a number of new mall projects are in the works at present.
Although real estate prices were estimated to have fallen by up to 20% in the second half of 2008.
However, the market faced a shortage in liquidity and of cash inflows from expatriates and from
Gulf countries in 2009. After a boom in demand in the period 2006-2008, the market slowed down
sharply in 2009 with large supplies and little demand. Some areas still posted price increases; others
saw a decline, and some saw prices remain stable. The government has made significant progress in
its efforts to improve the investment climate for real estate development, including reforms that
allow developers freer range over their master plans and zoning, but obtaining all the necessary
permits and licenses to start work can still be time consuming. Rising labor costs and volatile raw
materials costs have also put some pressure on the sector in recent years.
Despite of the global financial crisis, no cancellation of any mega project was announced in Syria.
However, some delays are expected. The below table shows the main mega real estate development
projects going on currently:
Page 4 of 17 Retail Sector Report March 31, 2010

Developer Description Cost Area Location Start date
USD sqm
Completion
Abraj Souria Souria Holding Hotel, offices and 319 m 260,000 Baramkeh, September 2014
commercial space
Damascus
2009
Aleppo Gate Souria Holding Hotel, offices and 64 m 300,000 Ballermoun,
2009 2011
commercial space
Aleppo
Cordoba Hills Akar Development, Al
Zaim Holding
Mixed-use development 680 m 1.4 m Kfarjoum, Aleppo July 2006 2011
Al Markaz Tower Markaz Real Estate High-rise office tower 30 m 5,000 Baramkeh, Suspended in 3 years
Development Co.
Damascus
Eighth Gate (1st Phase) Emaar-Invest Group Master-planned 500 m 300,000 Yaafour, Damascus February 2012
Overseas
business community
2008
Ibn Hani Resort Qatari Diar Real Estate Residential and tourist 350 m 244,000 Ibn Hani, Lattakia February End of
Investment Co
resort
2008 2011
Garden City United Contracting and Leisure, residential & 250 m 300,000 Damascus Airport 2006 2010
Engineering Co
commercial
development
Highway
Jasmine Hills Palmyra Real Estate Residential and leisure 30 m 200,000 Yaafour, Damascus March 2010
Development
2008
Murooj Valley Invest Group Overseas Residential N/A 19,000 Jdeidet Al Wadi, August 2011
Damascus
2008
Majed Al Futtaim Majid Al Futtaim Mixed-use 1 bn 1.5 m Yaafour, Damascus 2009 Partially in
2012
Naser Gardens Al Naser Gardens Syrian Residential compound 168 m 452,000 Kafar Qouq,
2009 N/A
Joint Stock Co.
Damascus
Porto Tartous Wahoud Group and Hotel, leisure and 560 m 480,000 Tartous May 2008 2011
other partners
commercial space
Page 5 of 17 Retail Sector Report March 31, 2010

Developer Description Cost Area Location Start date
USD sqm
Completion
Tareq Bin Ziad Bena Properties, Cham Hotel, leisure and 137 m 186,000 Aleppo city 2009 2014
Holding
commercial spaces
Yafour Gardens Urban Development a hotel, furnished 135 m 60,000 Yaafour, Damascus 2009 2012
Group
apartments, sporting
facilities, shopping mall
and supermarket
Damascus Hills Cham Holding Mixed-use development 3 b 5 m Damascus Homs
High way
N/A Alaa Ksado 5-star hotel, shopping 50 m 21,000 Aleppo’s Industrial
mall, a parking, cinema
and Agricultural
halls, swimming pools,
Fairground, located
ice rings, a dolphins
in the centre of
aquarium, a conference
hall, restaurants, 3 multipurpose
halls
Aleppo
2010 2014
Page 6 of 17 Retail Sector Report March 31, 2010

Retail Sector Analysis
I. Market Boom:
The retail sector is becoming an increasingly important driver in the national economy, estimated
to employ 27% of the country’s workforce and standing as the third largest contributor to GDP
at 17%. It is also one of the main reasons 4.8 million day-visitors from neighboring Arab
countries, including 1.8 million from Lebanon, cross into Syria annually.
Hence, Syria is experiencing a huge rise in the number of shopping malls, changing the face of
the country’s retail market. The arrival of international brands, more local spending by affluent
Syrians and a rise in investment dollars flowing in from the Gulf is fuelling growth in the retail
sector despite a global economic downturn.
Last year the volume of gross leasable area (GLA) of retail space in Damascus was estimated at
55,000 square meters (sqm) by Retail International, a shopping centre consultancy firm. The
British company, which provides specialist coverage of the Middle East, currently estimates this
figure has almost doubled in 2009 and now sits at 100,000sqm at least in Damascus. The below
table compares Damascus GLA to other main cities in the MENA area:
City GLA
Abu Dhabi 655,000
Amman 200,000
Beirut 550,000
Cairo 600,000
Damascus 100,000
Doha 520,000
Dubai 2.5 m
Jeddah 1.9 m
Kuwait City 500,000
Manama 590,000
Muscat 300,000
Riyadh 1.2 m
According to Cushman & Wakefield, an international real state consultancy, Damascus is the 3 rd
most expensive retail rents in the Middle East. It is also the eighth most expensive city in the
world for office rental cost. The report expected rents in Damascus to increase in the medium to
long-term because of a lack of supply. The below table shows the average retail rent cost in
several malls across the Middle East:
City Retail location Cost (EUR/sqm/year)
Tel Aviv Ramat Aviv 1,452
Beirut City Centre (BCD) 1,281
Page 7 of 17 Retail Sector Report March 31, 2010

II. Demand for international brands:
So far, mall owners claim that there has been no issue with retailers pulling out of the market due
to the global credit crisis because Syria is such a virgin market and shoppers are still spending.
During the first few weeks of operations in Damasquino, 3,000 people visited the centre every
day and now the number reaches 4,500 on average per day.
The loosening of government controls on international brands since 2003 has affected
dramatically the demand for international brands. People now are keen to shop at international
brand stores and these companies in turn are only willing to open in centers with facilities such
as security and parking.
Another reason is the high prices of oil over the past couple of years, generating extra funds for
Arab investors. Investors in oil-rich are constantly looking around the region for investment
opportunities at a time when the Syrian government has been working hard to increase the
amount of foreign direct investment in the country.
So far the shopping centers are not changing the way Syrians shop; the traditional souks are still
bustling with Syrians keen to pick up a bargain. Those involved with the new malls say they do
not pose a threat to the country’s souks because they target a wealthier clientele. The main target
for mall developers is shoppers who used to go to Lebanon to shop. Usually, middle-to uppermiddle-class
shoppers in the 14 to 40 age range who don’t usually go to the souks.
III. Challenges:
Tel Aviv Ayalon Shopping Centre 1,025
Beirut ABC Centre Achrafieh 997
Beirut Rue Verdun 925
Kuwait City Raya Mall 886
Beirut Kaslik 854
Damascus Cham City Centre 854
Dubai Mall of the Emirates 834
Manama Seef - Bahrain city centre 747
Syria’s retail sector faces several challenges. A lack of diversification of brands in shopping
centers may limit future growth. How many malls the country can support is also up for question
– the 100,000 sqm of mall space in Damascus is still far below the 200,000 sqm found in
neighboring Amman, the 600,000 sqm on offer in Cairo or the 2.5m sqm available in Dubai.
Another challenge for the sector is a lack of retail management expertise in the local market.
Syrian companies will have to invest in retail management courses if they are to compete in the
country’s expanding investment market with firms from the Gulf.
And while laws have been loosened, international brands still face high taxes and countless
regulations when opening in Syria. The recent dispute as to whether Carrefour supermarket can
trade under its own name or will have to be called Shahba Mall Hypermarket is illustrative of
what deters foreign companies from launching in Syria.
Despite the challenges, foreign retail companies are beginning to look more seriously at Syria.
And Syria is beginning to see the advantages shopping centers bring to the economy.
Page 8 of 17 Retail Sector Report March 31, 2010

IV. Current & upcoming Shopping Malls in Syria:
The below table illustrates a list of current or coming soon malls in Damascus and other cities:
Page 9 of 17 Retail Sector Report March 31, 2010

Eighth Gate
Mall
Mövenpick
Hotel and Mall
Damasquino
Mall
Cham City
Center
Developer Description
Cost
USD
Emaar IGO Souk, food court,
cinema complex
*80 m
Toumeh
International
recently
Tourism Complex 30 m
3 Businessmen 52 shops, 10 food
court, 4D cinema, 5
restaurants and cafes
furniture section,
Entertainment and
hypermarket
85 shops, gym, 13
restaurants,
entertainment and
hypermarket
Town Center shops, restaurants,
entertainment and
hypermarket
Area sqm
Average Rent
SYP/sqm/Year
Location Start date Completion
Page 10 of 17 Retail Sector Report March 31, 2010
55,000
49,000
40,000
50,000
35,000
*30,000-50,000 Beirut Road under
construction
2012
Kafarsouseh Signed off 2010
30,000-50,000 Kafarsouseh Open
30,000-50,000 Kafarsouseh Open
Syria-Jordan
highway
south of
Damascus
Airport
Road
Skiland shops, restaurants and
Open
entertainment
10,000
Queen Center shops and restaurants Mazzeh Open
Open

Salam Mall IBDAA
Investments
Concord
commercial
complex
Developer Description
Concord Al-Sham
International
Investment
Company
Doha Mall Al Baraa Real
Estate &
Development
Jasmine Mall Al Kadri Industry
and Trading
Company
Orient Trade
Tower
Abou Arab Haider
Group
200 shops, a food
court, a ski slope, a
large interior
entertainment place as
well as a parking for
some 3,000 cars
hypermarket,
furniture store, 40
outlets, health center,
a gym, roof pool, and
a spa, chill out lounge
and roof restaurant
Shops, a bowling
centre, 3 cinema
theatres, ice skating
area, a children
recreation area,
Supermarket
Shops, cafes and
restaurants
specialized in
furniture and home
appliances, office
spaces
Cost
USD
Area sqm
Average Rent
SYP/sqm/Year
40 m 45,000 40,000 – 50,000 Damascus
International
Fairgrounds
80 m
150,000
Location Start date Completion
Dareyya,
near the
highway
leading to
Jordan
Page 11 of 17 Retail Sector Report March 31, 2010
14,000
3,000
22,500
17,500 -35,000 Saydnaya-
Maaraba
Highway
17,000 -20,000 motorway
leading to
Daraa, next
to Town
Centre
25,000 -35,000 motorway
leading to
Daraa
2009
Sale of units
August 2010
2010
early 2010

Al Kheyr
Markets
Shahba Mall Sabbagh Group
and Jordan’s Al
Kurdi Group
Developer Description
300 shops, 7
restaurants, a
bookstore, a
kindergarten, a games
city, Adonis
Hypermarket
shops, 36 restaurants,
a hotel, 8 cinema and
French hypermarket
Carrefour
40 shops, food court
and restaurant
Furnished apartments
and commercial space
140 shops
New City Mall Syrian-Kuwaiti Al-
Jaz Group
N/A Syrian-Kuwaiti Al-
Jaz Group
Trans Mall Tarif Akhras
Group
Damascus Four Season Hotel Shops, cafes and
Boulevard
restaurants
Al-Mounchieh Addoumieh Group 98 shops, a
supermarket, a service
area
Majed Al Majed Al Futtaim Carrefour
Futtaim
hypermarket, 14
cinemas, Magic
Planet, 350 shops,
food court and
restaurants
Cost
USD
50 m
24 m
7.97 m
12.76 m
Area sqm
Average Rent
SYP/sqm/Year
Location Start date Completion
Page 12 of 17 Retail Sector Report March 31, 2010
55,000
125,000
32,000
25,000
45,000
2,500
33,000
200,000
highway
heading to
Turkey from
Aleppo
under
construction
Open
Aleppo Sale of
shops
Reqqa end of 2009 Mid of 2012
Homs End of 2009
Tajheaz
Damascus
Open
25,000 - 40,000 Aleppo Mid 2010
Yaafour,
Damascus
2009 2013

Dimas Center Al Ruken for Real
Estate
Development
Developer Description
Wholesaler Market,
shops, food court and
restaurants, bowling,
wood skating,
entertainment,
business center, SPA
V. Proposed designs for some projects:
a. Garden City Project
Cost
USD
Area sqm
Average Rent
SYP/sqm/Year
Location Start date Completion
150 m 154,000 30,000 – 50,000 Dimas 2010 2014
Page 13 of 17 Retail Sector Report March 31, 2010

. Cordoba Hills Project
c. Yafour Gardens Project
Page 14 of 17 Retail Sector Report March 31, 2010

d. Eighth Gate Project
e. Damasquino Mall
Page 15 of 17 Retail Sector Report March 31, 2010

f. Abraj Souria
g. Salam Mall
Page 16 of 17 Retail Sector Report March 31, 2010

Page 17 of 17 Retail Sector Report March 31, 2010