Syria’s trading heritage spans empires. But while the famed souks of Damascus and Aleppo still bustle with activity, a new shopping experience is being demanded: the air-conditioned souk, commonly known as the shopping mall. Unlike its neighbors, Syria has long been barren ground for shopping malls. The country has, however, undergone something of a retail revolution in recent years and the appearance of foreign goods and international retail chains is one of the most obvious signs of the country’s economic liberalization. Four shopping malls have opened in as many years and the same number are presently under construction. Upwards of six more are on the drawing board. All expect to find a warm welcome from a public which, until 2003, was banned from importing many foreign goods.
Syria’s new-found retail spirit has not, however, been without the odd hiccup. The Hejaz Souks project was to transform the central business district of Damascus, giving one of the world’s oldest trading hubs a shinny new commercial heartland. Yet three and a half years after the contract to build the 60,000 square meter commercial and retail development was signed, and two years after the multi-million project was expected to be finished, it remains a large hole in the ground.
Urban management problems
Work started on the five-story shopping mall, which will include a rail link joining the city center to the airport on a Build-Operate-Transfer (BOT) basis, in 2004. But little progress has been made since the foundations were dug three years ago. Urban management problems such as where to park cars and how to solve ever increased conjunction in front of the station, along with opposition from heritage groups concerned about the project’s impact on the character of the near 100-year-old Hejaz Station, has reportedly bogged down progress on the development which is being backed by the country’s largest holding company, Cham Holding.
“There has been a lot of opposition to the project from various NGOs, including the Friends of Damascus Society, to preserve the Hejaz building,” said Nabil Sukkar, managing director of the Syrian Consulting Bureau for Development and Investment.
But while the country’s flagship retail development has been tangled in delays, others are happy to take the title. Four shopping malls are now up and running in the country’s capital including the 35,000 square meter Town Center located on the southern outskirts of Damascus, the 8,000 sqm Cham Center situated in the recently developed up-market Kafer Souseh area, the 10,000 sqm Skiland shopping and entertainment venue incorporating Syria’s first ski-rink and the 2,500 sqm Damascus Boulevard, the country’s premier high end shopping address adjoining the Four Seasons Hotel. All are doing a brisk trade and have whetted the nation’s appetite — the core demographic of which is young — for the shopping mall experience. As Mohamed Awa, manager of Damascus Boulevard which opened last September, pointed out, “Syrians are no longer strangers to the shopping mall model, there is a big demand for this kind of shopping service and experience.”
The 55,000 square meters of dedicated shopping mall space in Damascus is still, however, far below that of other regional capitals. Amman boasts 200,000 sqm, Cairo 600,000 sqm, while Beirut’s City Mall and ABC mall by themselves provide more than four times the dedicated shopping mall space than what is on offer in Syria. And then there are those 1.3 million sqm in Dubai. “Syria is still quite underdeveloped in Western retail terms when compared with the leading Gulf states or even Jordan and Lebanon, despite the current economic downturn in the latter,” said Simon Thompson, head of Retail International.
That, however, is about to change. The next few years is set to see Syria come up to shopping mall par, with upwards of 10 malls being planned for the country’s two major cities of Damascus and Aleppo, several of which are vying to be the largest in the Levant. The next to open will be the Damasquino Mall, a 20,000 sqm enclosed mall centered on a hypermarket and adjoining the Cham Center in Kafr Sousah. Work has also begun on the high profile Eighth Gate development by Dubai-based Emaar Properties and Investment Group Overseas (IGO), an offshore company owned in majority by Syrian expatriate businessman Mouaffaq Al-Gaddah. The project — what is essentially a private city — will include a 55,000 sqm mall, along with a five-star, 15-story hotel, a similar tourist apartment building and a 30-story office tower, all spread over 300,000 sqm. The $550 million project is located in Yafour on the Damascus-Beirut highway.
More projects a coming
The company is also finalizing the details of its second major Syrian project, Damascus Hills, another multi-use development spread over 5 million sqm containing considerable retail space. Located on the northern outskirts of Damascus near the highway leading to Homs, early estimates have put the project’s total cost at more than $3 billion.
Construction has also begun on Yafour Gardens, a mixed-use development being backed by the Syrian-based Urban Development Group. The $120 million project has a built up area of 100,000 sqm and will include a hotel, furnished apartments, sporting facilities, shopping mall and supermarket.
Another Gulf heavyweight, the Majid Al-Futtaim Group, is backing a $1 billion integrated tourism city in Sabboura on the outskirts of Damascus. The project will have a built up area of 1.5 million sqm and contain a 200,000 sqm shopping mall boasting some 350 retail shops. When completed the mall is set to be the largest in the Levant.
Souria Holding, one of the country’s new holding companies, is also backing a number of high level developments. The company is behind plans to develop the Baramkeh area in central Damascus, turning the former transport hub into a mixed-use development including a five-star hotel, serviced apartments, office tower and considerable retail space containing a hypermarket and cinema. The $280 million development will be located on 3,700 sqm of land, with a built up area of 260,000 sqm.
The company is also backing a $70 million, 49,000 sqm mixed-use development on the Mezzeh Highway in Damascus which is expected to include around 17,400 sqm of retail space. In addition, it recently signed a BOT contract with the City Council of Aleppo to build and develop Aleppo’s Gate, a 300,000 sqm development that will include a shopping mall and new transport hub for the city. The project is expected to cost $60 million. The company has also finalized a deal with the Middle East hypermarket retailer Spinneys to establish outlets in each of its retail developments.
Finally, Mövenpick Hotels and Resorts will manage a five-star hotel in a 49,000 sqm complex, again in the Kafr Sousah area, of which 6,300 sqm will be dedicated to retail space. A further 75,000 sqm tourism development to be constructed next the Sheraton Hotel in Damascus and, also, contain a shopping mall.
Adding to the retail boom
Numerous factors are driving the country’s retail boom. The 2003 decision allowing the import of foreign goods has seen an ever growing array of international brands appear on Syrian shelves. The successful move by Syria’s garment industry to begin producing international clothing brands under license has also seen a number of high profile clothing lines appear throughout the country and Syria’s new malls are heavy in clothing outlets. “Greater consumer confidence in Syrian manufactured garments, gained from the production of clothing under the license of international brands since the early-1990s, has preempted the shift from the souk to the high street,” a recent report by Colliers International on Syria’s retail sector found.
Syria’s withdrawal from Lebanon — and the subsequent political tension between the two countries — has also aided the country’s retail conversion, with more affluent Syrians choosing to spend their pounds in Damascus rather than Beirut, generating a viable retail market. “Before, the closest market was Lebanon,” Muhannad al-Mallah, general manager of the Damasquino Mall, said. “These days, not a lot of people are going there. They are excited to find the kinds of brands they found in Lebanon right here.”
The country’s young demographic is also starved of leisure amenities and shopping — or window browsing at the very least — is fast becoming a national past time. “The popularity of shopping and dining as a key leisure activity in Syria for both the middle and high classes and increases in consumer purchasing power have also stimulated demand for retail malls with strong brand representation,” Colliers International concluded.
Syria’s retail sector is becoming an increasingly important driver in the national economy. The sector is estimated to employ 27% of the country’s workforce and stands 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, crossed into Syria in 2006, the last year hard figures are available.
Yet obstacles remain. The most common complaint being the high tariffs levied on many imports, which can reach as high as 50% on some items, hampering the development of high end shopping. “That’s why we are trying to choose middle range brands,” al-Mallah said. “The high-end would be too high with tax.” A lack of diversification among outlets, particularly clothing brands, has also been singled out as a weakness. The rising cost of raw materials is also seeing the costs of projects throughout Syria balloon.
For now, however, its full steam ahead — the simple guide being, if you build (and air-condition) it, they will come.
