Retail demand in Makkah is generated from two distinct segments; the city’s residents and the Hajj and Umrah pilgrims. These have shaped the retail landscape in the city with shopping centres that mainly cater to pilgrims concentrated in the vicinity of the Holy Haram and retail centres serving the residents located to the north of the city closer to the residential areas.
With the City’s supply significantly lower than other cities in the Kingdom, the paper sheds light on this anomaly due to a lower mall density despite the city’s large population base and the international pilgrim’s visitations.
“The key challenges facing Makkah’s retail sector could be mainly attributed to a combination of the shortage of large and suitable land plots for mall developments and the high land prices relative to other cities in the Kingdom. High infrastructure cost and the city’s residents’ preference towards shopping in Jeddah have limited the development of new shopping centres”. Commented Imad Damrah, Managing Director, Colliers International KSA.
He adds “With the execution of several strategic infrastructure and transportation projects, along with the vision 2030, capacity is expected to rise substantially, translating into significant growth in the numbers of visitors/pilgrims. This will fuel the city’s local economy resulting in an increase in consumption, retail sales and demand for new retail projects”.
The research concludes with a short-term outlook and a medium to long-term outlook on the City’s retail sector which is expected to see an increase in the supply of large malls or “destination” Malls.