Analysis Saudi Arabia Vision 2030 ‘Entertainment is the new retail’ for Riyadh malls By Andy Sambidge December 7, 2022, 5:51 AM Johannes Sadek/dpa via Reuters A Muvi in Riyadh. The company's cinemas are found in malls all over Saudi Arabia Over 50% of space in city’s new shopping centres is devoted to funMalls trying to entice ‘the all-important younger demographic’PIF subsidiary Seven planning 21 massive entertainment hubs More than half the new retail space being developed in Riyadh is dedicated to entertainment venues, research has found, as Saudi Arabia seeks to attract younger people to malls. At the Mall of Saudi, being developed by Majid Al Futtaim in north Riyadh, large areas will be allocated to dining, leisure and entertainment – and experts believe the trend will be replicated across the city. Faisal Durrani, partner and head of Middle East research at Knight Frank, said: “Over 50 percent of what is being planned is allocated to entertainment. 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Analysts highlighted growth in the entertainment sector, saying it would be driven by the $1.1 billion Ignite programme, which aims to “position Saudi Arabia as the region’s leading digital entertainment and media production hub”. S&P added that up to SR16 billion ($4.3 billion) is to be invested in retail in 2022-23, increasing space by about 20 percent. Movies are a core part of the entertainment offering in Riyadh’s malls and the leading brands are Muvi Cinemas, Vox Cinemas and AMC Cinemas. The children’s entertainment business in shopping centres is dominated by Spark’s and Billy Beez, according to Knight Frank. Durrani added that despite the rapid growth of e-commerce in Saudi Arabia, the desire to operate physical stores in malls is still growing. Most large retailers, domestic and international, are finding innovative solutions to integrate their stores with online shopping, such as allowing online purchases to be picked up using QR codes. Across Riyadh’s 25 regional and super-regional malls, which together cover an area in excess of 1.4 million sq m, supermarkets and family entertainment dominate the space. In each shopping centre, supermarkets account for 8,000 sq m on average and family entertainment for 5,300 sq m, according to the Knight Frank analysis. Durrani said: “The appetite of international retailers to enter the Saudi market continues to strengthen and 60 percent of the international investment licences issued in Q2 this year were to retail and wholesale businesses. In Riyadh alone, plans to grow the population to 17 million by the end of the decade, from around 7.5 million today, presents a very clear and tantalising opportunity for retailers. “What’s really interesting, however, is the rapid rise in entertainment and leisure facilities, which have quickly emerged as the second biggest offering in Riyadh’s malls behind anchor supermarkets, which have historically been the main tenants.” Seven’s first entertainment hub is planned for Al Hamra in Riyadh Saudi Arabia’s government turbocharged its plans for the entertainment sector last week when Saudi Entertainment Ventures (Seven), a subsidiary of the Public Investment Fund, announced a SR50 billion investment to develop 21 entertainment destinations with over 150 attractions across 14 cities. Construction of Seven’s first entertainment hub has started in the Al Hamra district of Riyadh after the company secured partnerships with global brands including Clip ‘n Climb, Warner Bros Discovery, Mattel and Hasbro. Abdullah Al Dawood, chairman of Seven, said the kingdom’s entertainment sector was “full of opportunities and plays an important role in the growth of the local economy”. Seven Al Hamra will house a hubless wheel ride, indoor surfing, a 10-lane bowling alley, indoor skydiving, an indoor karting racetrack, as well as cinemas, restaurants, cafes, stores and fitness facilities. The company is also planning to build entertainment hubs in Kharj, Makkah, Jeddah, Taif, Dammam, Khobar, Al Ahsa, Madinah, Yanbu, Abha, Jazan, Buraidah and Tabuk. What’s inside Riyadh’s malls? Riyadh’s current retail supply is around 3.4 million sq m, according to Knight Frank. Regional malls (around 40,000 to 80,000 sq m) account for 47 percent of the total supply. Super-regional malls (80,000 sq m and over) make up approximately 17 percent of existing supply, but 46 percent of the retail space pipeline. International retailers Zara, H&M and Redtag are the three most prominent anchor store brands in the Saudi capital, Knight Frank said, while Arabian Centres Company and Hamat Property Company are the two largest retail operators in Riyadh. Apparel remains the dominant category in Riyadh’s biggest malls, with 40 percent of shops selling clothing. Next on the list are cosmetics and accessories. More than half the food and beverage brands found in super-regional and regional malls are international. In lifestyle retail developments, the food scene is led by local, homegrown brands. Steak House has the most restaurant outlets while Starbucks is the biggest coffee shop brand.