Cenomi Centers’ growth reflects Saudi retail potential

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• Footfall up to 124 million
• Cenomi profit up 49%
• Kingdom rises in retail ranking

Saudi Arabia’s largest operator of shopping malls has reported record footfall, which drove a 49 percent jump in net profit last year.

The number of visitors to Cenomi Centers malls rose by 19 percent to 124 million in 2023, smashing the previous pre-Covid record of 114 million in 2019.

The company delivered SAR2.3 billion ($613 million) in revenue, up 2 percent year on year. Net profit exceeded SAR1.5 billion on the back of growth in net rental revenue and the sale of non-core properties.

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In a filing to the Saudi Stock Exchange, the company said it plans to open six new projects by 2027. These will increase its total retail space by 44 percent to about 2 million sq m. 

Cenomi added that it is on track to open at least one mall per year over the next four years. The company’s share price rose by nearly 4 percent in early trading after the announcement.

Occupancy rates in its malls also rebounded from 90 percent in the third quarter of 2023 to nearly 93 percent at year end. Full-year net rental revenue increased by 4 percent.

Alison Rehill-Erguven, CEO of Cenomi Centers, said: “The strong interest from international and local brands highlights the Saudi market’s potential.

“The recent opening of U Walk Jeddah, already pre-let at close to 80 percent, signifies a new era in retail and entertainment.”

During the year, the company renewed 2,133 lease contracts and opened the inaugural Starbucks Reserve in Jeddah Park. It attracted 160 international brands such as Samsonite and Dyson, along with regional brands such as LuLu Hypermarket. 

Last year Cenomi Centers and franchiser Cenomi Retail held talks on a possible merger, but these have now been terminated because bosses believe market conditions are not favourable.

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• Cenomi Centers gets $1.4bn to support growth plans

Cenomi Centers’ growth reflects Saudi Arabia’s growing retail strength, according to analysts. The kingdom rose nine places to No 3 in the latest Global Retail Development Index, published by consultancy Kearney.

Debashish Mukherjee, a partner at Kearney and consumer and retail practice lead in the Middle East, said the kingdom was “at the forefront of retail’s next wave of growth”.

Saudi Arabia’s rise “is a clear indicator of its dynamic retail environment and its strategic initiatives to foster a competitive and diverse economic landscape”, said Mukherjee.

The index of around 40 emerging economies analyses economic health, consumer wealth and regulatory framework to gauge the retail potential of around 40 emerging economies. It is topped by India.

Kearney said Saudi Arabia’s rise in the index was underpinned by an increase in non-cash retail transactions from 16 percent in 2016 to 62 percent in 2022. The kingdom’s target is 70 percent by 2030.

The use of buy now, pay later services is also increasing, with domestic providers Tamara and Tabby paving the way.

“The entry of international brands and the expansion of entertainment and lifestyle sectors indicate a thriving retail environment,” Kearney’s report added