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Retail Sector in Syria

Commercial Malls and Center

Alaa Alazem Jammal

March 2010

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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

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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

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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:

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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 Mixed-use development 680 m 1.4 m Kfarjoum, Aleppo July 2006 2011
Zaim Holding
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 Highway
development
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 19,000Jdeidet 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

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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 3b 5 m Damascus Homs
High way
N/A Alaa Ksado 5-star hotel, shopping 50 m 21,000 Aleppo’s Industrial 2010 2014
mall, a parking, cinema and Agricultural
halls, swimming pools, Fairground, located
ice rings, a dolphins in the centre of
aquarium, a conference Aleppo
hall, restaurants, 3 multi-
purpose halls

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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 3rd
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
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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

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 upper-
middle-class shoppers in the 14 to 40 age range who don’t usually go to the souks.
III. Challenges:
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.

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IV. Current & upcoming Shopping Malls in Syria:
The below table illustrates a list of current or coming soon malls in Damascus and other cities:

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Cost Average Rent
Developer Description Area sqm Location Start date Completion
USD SYP/sqm/Year

Eighth Gate Emaar IGO Souk, food court, *80 m *30,000-50,000 Beirut Road under 2012
Mall cinema complex 55,000 construction
Mövenpick Toumeh Tourism Complex 30 m Kafarsouseh Signed off 2010
Hotel and Mall International 49,000
recently
Damasquino 3 Businessmen 52 shops, 10 food 30,000-50,000 Kafarsouseh Open
Mall court, 4D cinema, 5 40,000
restaurants and cafes
furniture section,
Entertainment and
hypermarket
Cham City 85 shops, gym, 13 30,000-50,000 Kafarsouseh Open
Center restaurants, 50,000
entertainment and
hypermarket
Town Center shops, restaurants, Syria-Jordan Open
entertainment and 35,000 highway
hypermarket south of
Damascus
Skiland shops, restaurants and Airport Open
entertainment 10,000 Road
Queen Center shops and restaurants Mazzeh Open

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Cost Average Rent
Developer Description Area sqm Location Start date Completion
USD SYP/sqm/Year

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

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Cost Average Rent
Developer Description Area sqm Location Start date Completion
USD SYP/sqm/Year

Al Kheyr 300 shops, 7 Open


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

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Cost Average Rent
Developer Description Area sqm Location Start date Completion
USD SYP/sqm/Year

Dimas Center Al Ruken for Real Wholesaler Market, 150 m 154,000 30,000 – 50,000 Dimas 2010 2014
Estate shops, food court and
Development restaurants, bowling,
wood skating,
entertainment,
business center, SPA

V. Proposed designs for some projects:

a. Garden City Project

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b. Cordoba Hills Project

c. Yafour Gardens Project

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d. Eighth Gate Project

e. Damasquino Mall

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f. Abraj Souria

g. Salam Mall

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