Malls Presentation May 23 rd, 2012

THE NEED FOR MALLS Life is rather hectic. Time has become a valuable factor. People are looking for more convenience in their lifestyles. The “MALL” concept offers a rather appealing choice of recreation. “We used to build civilizations. Now we build shopping Malls” (Bill Bryson)

Different Shopping Experience MALLS - A large, often enclosed shopping complex containing various stores, businesses, and restaurants usually accessible by common passageways Lifestyle Centers: Generally, it's a center that does not have an anchor tenant in the classic sense (that is, a department store). However, lifestyle centers increasingly have a cinema as a major tenant. Others have just a small collection of exclusive shops. New Town Centers: following traditional urban designs, providing a pedestrian-friendly environment that also contains public spaces that are available for community events. They usually include cinemas, sit-down restaurants, as well as residential and office space Community Malls: are built close to residential areas to enable nearby communities to have easier access to the mall without having to endure traffic Outlet Malls : in which manufacturers sell their products directly to the public through their own branded stores, often at heavily reduced prices Entertainment Malls: shopping centers where entertainment facilities are also found, such as cinemas, food courts, kids areas, etc…

Rent vs. Cost of Doing Business Beirut has the most expensive retail rent in the Middle East, it’s ranked as the 30 th most expensive city in the world. The rent of retail space is more expensive than Stockholm, Helsinki or even Luxembourg (The Daily Star, Cushman & Wakefield Consultants) Infrastructure Impact Enhancement of infrastructure inside and around the malls Utilities charges (electricity, gas, water, etc…) have become encumbering Changing Policy Inflation is increasing (5.2% in 2011 and 6% in 2012 – CIA ) Salaries Increased Dramatically Increase in municipality Taxes Built Up Property Taxes Income Taxes Increase in VAT will lead to a decrease in sales Corruption increased to record high Safety & Security Impact Political turmoil necessitates the need for additional security measures adding the costs

Retailers on the Move Changing patterns of consumer behavior: – Demographics are changing – Shopping habits have evolved – Meeting points Time of transformation create opportunities – Modern retail vs. traditional retail – Smaller more efficient stores, multiple locations Changing trends: retailers must adapt business models – Encouraging frequent shopping – Improved merchandising – Customer service Entertainment and shopping – Targeting and attracting consumers – Benefitting from the others

Malls - Who is Benefiting? A Win-Win Situation for All Consumers Merchandising mix offers wider choices Competition decreases price Offers and promotions Improved client service Leisure and entertainment Easy Parking Retailers Faster Growth; Open new stores Good locations give better exposure benefitting from inflow of clients Marketing Specialized Retail Higher standards Mall Developers Long Term investment Higher returns Contributing in urban sustainability Government Generation of Tax Revenue (Built up, Municipality, VAT, contracts, Income Tax) Construction Permits (large sqm) Improved collection Utilities revenues (electricity, phones, internet, etc.) Employment revenues (taxes, NSSF, etc.) Corruption