Investing in Malls – the Opportunity of a Lifetime

Buying Mall Space to Rent

Rents at both UAE’s Mall of the Emirates and The Dubai Mall outstrip supply. Retail sales are expected to increase by 33%  and so will rents. 

Ventures Middle East

Why Consider Investing in Malls?

• We all hear ‘get rich quick’ stories about investing in plots. But they are a big gamble. With high rewards, come high risks.
• Renting out real estate is one of the safest and easiest ways to make money. Fact. But domestic house rentals, although steady, are not particularly high.
• You could buy into luxury apartments which will offer a much better return.
• Commercial plazas are another good option for people with a higher budget, but comes with its own set of problems like tenancy issues etc.

So where can you get a great capital gain as well as an excellent rental return? Just look to the malls in Dubai, India, Thailand and Turkey.

Good Rental Income as well as High Capital Gains

A safe and secure investment which can turn into the most lucrative you ever made.

Retail space offers excellent rental returns which can easily double, or more, in a handful of  years. Your capital gain could go through the roof whilst still making you a tidy rental income doing so.

Some of the benefits of investing in malls include:

• No stress finding tenants. This is the responsibility of the mall’s management team who have a vested interest in full tenancy.
• Less advertising. You can reap the rewards of big brand global advertising which attracts consumers from all over the area.
• Less depreciation. Retail units tend to be ‘boxes’ with very little in the way of furnishings and exterior building repairs. Retailers want their own style so they bring their own decor.
• More flexibility. You can offer shorter leases to maximize your profits.
• Security. Malls can have their own insurance and security to protect your property.

So which mall should I invest in?

A ‘strip mall‘ is a small open air mall which generally runs alongside a main road and is usually ‘anchored’ to one big brand chain. These types of malls are often too dependent on one or two ‘big box’ retailers and are not a good investment opportunity. If the ‘anchor stores’ pull out, the mall can quickly die. Outlet Malls tend to be owned by manufacturers so are not a viable investment opportunity. They are used to get rid of excess or out-dated stock at reduced prices.

The best Mall investment – Grand/Super/Regional Mall

Huge complex malls with diversified retailers and entertainment are the types of mall ripe for investment opportunities. You can profit from the pull of big brand, often global advertising  by the flagship stores that attracts people from all over the region. Choose here and your initial investment will rise exponentially as the mall draws in more and more customers for the new ‘shoppertainment‘ experience where consumers combine retail and lifestyle activities such as eating or drinking out, going bowling or visiting the cinema. New style malls offer a range of traditional retail outlets as well as food, entertainment, cinemas, even offices and gyms.

As an investor, you need to consider where your choice of retail space fits in with this modern consumer.

It’s all about placement

You need to think carefully about where you can buy, to charge the most rent.  How can you best profit from the prestige and market recognition of the big brand stores? Where will there be the most ‘passing trade’ where retail rents will be at a premium? Will there be sections like food courts? Prestige brands? High fashion? Is the price of a ground floor store near to parking and  the main entrance worth the rental income you can charge? What kind of rent can you charge for a cheaper spot?

Your choice will depend on the mall design. Developers create a mall with big brands in mind. Find out which companies are involved and where.

Anchor Store

An ‘anchor store’ is, as the name suggests, an anchor that holds the rest of a mall together. National and international big brands draw in a high volume of customers and establish the location as an attractive shopping destination. They are beneficial for other retailers as they drive up foot traffic. These stores are usually on opposite parts of the mall so customers will walk through and view as many goods as possible. Rents for anchor stores are often heavily discounted in recognition of their ‘pulling power’. These negotiations are direct with developers so you need to ask which brands and where.

Big Box Store

A big-box store (also supercenter, megastore ) is a physically large retail establishment, usually part of a chain of stores. Often synonymous with ‘anchor stores’, flagship stores tend to offer something ‘extra’; a more innovative ‘customer experience’. This may involve media hype, in-store technology, exclusive trials of new products, event launches etc to inspire and excite consumers.

It is essential you find out from developers the location of these stores and invest accordingly.

Leisure and entertainment facilities

Some of the most lucrative rents are clustered around the entertainment and food hubs. So where will they be? What will be offered? Will there be a cinema chain? How many food outlets? What are the expected rental returns?

Investing in malls are the way to go in Pakistan

Look to the super malls of Dubai, India, Turkey, Thailand, and their amazing returns for investment. High rental yields, headache- free tenancy management, flexible rental contracts, excellent capital gains, less depreciation and it is all safe and secure.

What are you waiting for?

Captain (Retd) Shahnawaz Yaqub Bhatti

Investment Consultant and CEO at Imlaak

Mob : +92 333 1616160 ( WhatsApp)

UAN : +92 3 111 777 555