Wednesday, October 31, 2007

CATHAY Organisation has teamed up with Emaar Malls Group LLC, a wholly owned subsidiary of Dubai’s Emaar Properties PJSC, in a major joint-venture dea

CATHAY Organisation has teamed up with Emaar Malls Group LLC, a wholly owned subsidiary of Dubai’s Emaar Properties PJSC, in a major joint-venture deal that could see the local cinema chain operating cineplexes in as many as 150 shopping malls across the Middle East and beyond.

This deal makes Cathay - which also operates cinemas in Malaysia - the first Singapore exhibitor to expand beyond South-east Asia. It was picked from several international contenders to take up a 25 per cent stake in Reel Entertainment LLC, which will design and manage cineplexes in the 150 shopping malls that Emaar Malls Group plans to open across the Middle East, North Africa and the Indian subcontinent.The first two cineplexes are scheduled to open late next year.

The first will be Dubai’s largest cineplex, with 22 screens, in The Dubai Mall - a shopping complex in Emaar’s US$20 billion Downtown Burj Dubai development, which will also house the world’s tallest tower.

When it opens, The Dubai Mall will also be one of the world’s largest malls, with a floor area of 12.1 million square feet - about eight times the size of VivoCity.

The next one will be an eight-screen cineplex in the Dubai Marina Mall. That makes it a total of 30 screens and a ‘total investment of US$30 million’, said Choo Meileen, Cathay’s executive director, in an exclusive interview. ‘Our share is 25 per cent - US$7.5 million.’

There will also be a management contract, in which Cathay will take care of the day-to-day running of the cinemas.

Ms Choo says the partnership with Emaar - the largest property developer in the Middle East - paves the way for the Cathay group to expand into areas it would not have been able to penetrate on its own. ‘It gives us an opportunity to make use of the expertise we have gained over the years, which is what I’ve always wanted to do - that is, manage cinemas for people,’ she said.

Even if not all 150 malls have cineplexes, the scope is still amazing, said Ms Choo. ‘When we did our research, we found that there was no one big chain throughout the Middle East. That is because many of the cinemas are stand-alone (single- screen), mom-and-pop operations. So the potential for the cineplex is very great. This joint venture will change the way cinemas are run in the Middle East.

‘This deal plays a significant role in Cathay’s long-term investment, added Ms Choo. ‘The Singapore market is already saturated - it’s a very mature industry in terms of cineplexes. But in the Middle East it’s like being in the 1980s, or 20 years before cinemas became cineplexes.’

Rashid Zakaria Doleh, chief executive officer of Emaar Malls Group LLC, said: ‘This joint venture supports Emaar’s overall Vision 2010 to become one of the world’s most valuable companies through aggressive expansion strategies. The ultimate goal of the joint venture is to be the biggest and best provider of world-class lifestyle and entertainment across the region.’

Mr Doleh said that the company has plans after The Dubai Mall. ‘We are currently developing Cairo Gate, the largest mall in Egypt, in addition to two other developments: Uptown Cairo and New Cairo City. All three malls will have cinemas upon completion in the next five years. Beyond Egypt, key markets on the horizon with a cinema operation are Morocco, India, Pakistan, Syria, Saudi Arabia and Turkey.’

Currently, Cathay manages 41 cinema screens in Singapore and 33 in Malaysia. Ms Choo said that, thanks to the partnership with Emaar, ‘Reel Entertainment could become one of the biggest cinema exhibitors in the world’.

Source : Business Times - 30 Oct 2007

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