������Ƶ

RIYADH: Gulf Cooperation Council countries have outperformed the global average in the 2024 Carbon Circular Economy Index, scoring 41.5 points, latest data showed.

Released by the Gulf Statistical Center, the index serves as an assessment tool to evaluate the progress of 125 nations toward achieving net-zero emissions through a balanced approach that incorporates mitigation technologies and enabling tools. 

It also measures their transition to a carbon-neutral future based on circular economy principles, the Oman News Agency reported. 

The GCC’s performance highlights its growing commitment to sustainable energy and carbon reduction strategies. 

Its push toward a circular carbon economy aligns with broader economic diversification goals, as the region seeks to reduce its reliance on hydrocarbons while tackling environmental challenges. 

“The contribution of the design capacity of renewable energy plants in the GCC countries to the total design capacity of renewable energy plants worldwide also increased, reaching 0.43 percent in 2024, compared to 0.03 percent in 2015,” the ONA report stated. 

This expansion reflects increased investments in solar, wind, and other clean energy projects across the region. 

With some member states ranking among the world’s highest per capita emitters, the shift to sustainable practices — such as waste recycling, renewable energy development, and carbon capture — aims to balance continued energy leadership with climate commitments. 

According to the Jeddah-based Gulf Research Center, rapid urbanization and resource-intensive consumption patterns have further driven the need for circular solutions, particularly in water and waste management, as the GCC works to mitigate its ecological footprint while fostering green investment and job creation. 

Currently, the GCC operates three commercial carbon capture and storage facilities, with a combined capacity of 3.8 million tonnes of CO2 per year. These facilities play a crucial role in reducing industrial emissions, the ONA report noted. 

Looking ahead, the region is projected to capture and store up to 65 million tonnes of CO2 annually by 2035. CCS technology is a key component of the GCC’s strategy to limit global temperature rise to 2 degrees Celsius and achieve carbon neutrality by 2050. 

GCC’s leadership 

During its G20 presidency in 2020, ������Ƶ introduced the Circular Carbon Economy Framework, which was endorsed by G20 leaders as a sustainable and cost-effective approach to tackling climate change while ensuring energy security. 

Building on this momentum, the Kingdom launched its CCE National Program in 2021, focusing on emissions reduction through four key strategies: reduce, reuse, recycle, and remove. 

������Ƶ has since implemented over 30 CCE initiatives across its energy sector, aligning with Crown Prince Mohammed bin Salman’s 2021 pledge to achieve net-zero emissions by 2060. 

The UAE has also emerged as a regional leader in circular economy policy. Its Circular Economy Agenda 2031 serves as a national blueprint, outlining 22 policies across four key sectors — manufacturing, food, infrastructure, and transportation — to drive advanced recycling, economic growth, job creation, and resource efficiency. 

As host of COP28, the UAE reaffirmed its global sustainability commitment, leveraging its strengths in green finance, clean energy, and climate innovation.

RIYADH: Shopping malls in ������Ƶ have strong growth prospects, as consumers increasingly prefer the convenience of retail and entertainment offerings combined under one roof, experts have told Arab News.

Strengthening the Kingdom’s retail sector, including the development of shopping destinations, is one of the crucial goals outlined in the Vision 2030 program, as ������Ƶ aims to become a global hub of business and tourism by the end of the decade.

In June, a report by global real estate consultancy Knight Frank revealed that Riyadh is leading the Kingdom’s retail transformation, with mall rents up 4 percent in a year and 2.2 million sq. meters of new retail space planned by 2030.

According to the analysis, average mall rent in the Saudi capital rose to SR2,848 ($765) per sq. meter by the end of March, with occupancy rates up 5 percent to reach 92 percent in the first quarter of 2025. 

Speaking to Arab News, Olivier de Cointet, senior adviser at management consulting firm Arthur D. Little, said that shopping malls are set to thrive in the Kingdom as they evolve into social venues rather than mere shopping destinations.

“With retailtainment, which is the fusion of retail and entertainment, becoming an essential part of the customer experience, malls play a significant role in supporting the Kingdom’s vision to become a business and tourist destination hub,” said Cointet.

He added: “These destinations enhance ������Ƶ’s appeal as a business and tourism hotspot and keep more consumer spending within the Kingdom.”

Anthony Spary, head of retail, leasing, and offices at CBRE for the Middle East and North Africa region, echoed similar views, saying that shopping malls in the Kingdom could serve as social hubs for both locals and visitors, promoting cultural exchange and providing a platform for both international and homegrown brands. 

Today’s consumer expects seamless integration between all channels, and this benefits physical as well as digital retail in terms of driving footfall, experience, and convenience.

Sundeep Khanna, partner at ADL

“Malls often feature concepts such as family entertainment centers, cinemas, cultural events as well as unique anchor attractions, all of which will draw tourists and encourage repeat footfall with residents,” said Spary.

Joe Abi Akl, partner and head of Oliver Wyman’s Retail and Consumer practice for India, the Middle East and Africa, said that shopping malls in ������Ƶ have allocated nearly half of their gross leased area to non-retail activities, which could help them serve as social and entertainment destinations.

“Shopping malls, with a pipeline exceeding 6 million sq. meters of GLA, play a vital role in this vision by offering integrated, experience-led environments. With more than 40 percent of mall space planned for non-retail activities, they’re not just commercial centers, but social and cultural anchors that enrich the Kingdom’s appeal as a leisure and lifestyle destination,” said Abi Akl.

These comments align with ������Ƶ’s efforts to become a global hub for tourism and business by the end of the decade, with the Real Estate General Authority projecting the property market to reach $101.62 billion by 2029, representing a compound annual growth rate of 8 percent from 2024. 

Shaping retail spending

CBRE’s Spary said the rising number of shopping malls in the Kingdom is expected to boost retail spending as they provide consumers with convenience and a wide variety of product choices.

“������Ƶ offers a unique retail landscape in the region, providing a blend of strip malls, line retail, as well as community and regional shopping districts. This new wave of shopping malls will only add to this offering and create a more varied mix for the consumer,” added Spary.

These views regarding consumer spending align with the findings of a recent report published by global consulting firm AlixPartners, which said the Kingdom’s consumer market is evolving rapidly, characterized by adaptability, shifting spending patterns, and resilience in the face of global economic challenges.

AlixPartners noted that the groceries and clothing categories are expected to remain key spending sectors in 2025, with consumers prioritizing value-driven deals and savings.

Craig Watson, head of retail at JLL in the Kingdom, stated that the development of several high-quality retail centers will transform the consumer experience across ������Ƶ, offering a wide array of choices and ultimately boosting overall spending.

“When regions go through extensive and rapid growth, the consumer is always the winner, with increased supply providing new and exciting concepts to experience. The retail mix, success, and execution of these places will ultimately determine the share of wallet and who benefits most,” said Watson.

In February, during the Retail Leaders Circle, Abdellah Iftahy, senior partner at McKinsey and Co., said that the Kingdom’s retail sector is undergoing a significant transformation, driven by a digitally savvy young population and increasing consumer confidence. 

He added that by 2035, 75 percent of retail spending is expected to come from the Saudi youth.

E-commerce vs. shopping malls 

Although the growth of e-commerce in ������Ƶ may pose challenges for traditional retail formats, it can also complement the development of malls in the Kingdom, according to experts.

Watson notes that the Kingdom has emerged as a major e-commerce hub in the Middle East and North Africa, driven by its young, tech-savvy population and expanding internet coverage.

He believes the growth of the e-commerce sector will not negatively impact the operations of shopping malls nationwide. 

“As is the case with every region, the overwhelming majority of retail sales is derived from brick-and-mortar transactions. Malls will need to adapt by integrating technology, enhancing the customer experience and offering unique in-person experiences that cannot be replicated online,” said Watson.

According to Spary, many consumers still prefer the tactile experience of shopping in person, and malls can integrate e-commerce by offering click-and-collect services.

“Malls can serve as experiential spaces where brands showcase their products, attracting customers who enjoy the physical shopping experience. Taking into account both cultural shopping preferences as well as the impact of the climate on consumer behavior, increasing e-commerce penetration will add to the overall omnichannel approach that retailers are adopting across the region,” said Spary.

Sundeep Khanna, partner at ADL, said that the growth of the e-commerce sector is not cannibalising shopping malls, but is actually complementing them.

“Today’s consumer expects seamless integration between all channels, and this benefits physical as well as digital retail in terms of driving footfall, experience, and convenience,” said Khanna.

Attracting international brands 

Spary told Arab News that the transformation and upgrade of retail offerings in the market of ������Ƶ will pave the way for new international brands to enter and grow within the Kingdom, contributing to the country’s wider economic goals.

According to the CBRE official, the entry of new brands will not only enhance consumer choices but also stimulate a competitive environment that encourages brand expansion and attracts investment.

“CBRE is currently seeing record levels of demand from international brands looking to expand into the region. This demand is likely to continue given the robust and ever-maturing nature of this market,” said Spary.

Cointet noted that ������Ƶ has become an attractive destination for global fashion, luxury, and food and beverage retailers, drawn by the population’s strong spending power and the rise of premium mall spaces such as Riyadh Park and Mall of Arabia.

“Mall expansion goes hand-in-hand with pro-investment reforms — for example, ������Ƶ now allows 100 percent foreign ownership in the retail sector, encouraging international companies and developers to invest directly,” added Cointet.

The Arthur D. Little official further stated that the expansion of shopping malls in the Kingdom will also provide local brands with unprecedented opportunities to establish a national and international footprint.

“This is critical for developing the Saudi economy and I anticipate we will see more Saudi-owned brands enter the world stage in the coming years,” added Cointet.

Potential challenges

The experts also highlighted some of the challenges in ������Ƶ’s retail landscape, particularly surrounding shopping malls, including oversupply.

“Whilst there’s certainly a risk of oversupply with many large projects due to be delivered over the course of the next two to three years, the need for continuous innovation and adaptation to changing consumer trends will be crucial for the sustainability of shopping malls in the Kingdom,” said Spary.

The CBRE official further said that new attractions, entertainment options, and cultural elements will play a pivotal role in reshaping the retail landscape in the market.

Spary added that the integration of these features will create a more engaging and immersive experience for consumers, ultimately redefining how shopping is perceived and enjoyed in the Kingdom.

Cointet expressed a slightly different view, stating that the demand for malls in ������Ƶ is expected to rise in the coming years due to population growth.

He explained that this challenge could be addressed by developing large-format mega malls that serve as destinations in themselves, alongside smaller community malls designed to offer convenience at the local level.

In April, a separate analysis by S&P Global said that oversupply, changing retail preferences, and pressure on rental yields amid elevated capital expenditure by landlords could exert pressure on the Kingdom’s retail sector.

According to the US-based agency, the volume of retail projects in the pipeline raises the risk of potential oversupply, particularly in secondary locations where demand may not be sufficient to absorb new retail spaces. 

Discussing the risk of oversupply, Cointet said: “������Ƶ’s aggressive development pipeline of new retail space underway — raises the risk of too much supply coming to market, which could pressure occupancies and rents in some areas, or even threaten the launch of some of the programs.”

He added: “Landlords and developers may need to differentiate their properties with unique experiences, dining, and entertainment offerings  — and even offer lease incentives — to avoid saturation and keep shoppers engaged in an evolving retail landscape.”