If any time soon you plan to shop in Dubai, the largest city in the United Arab Emirates, better make sure the current account balance is nicely topped up or the credit card has enough spending power left before hitting the malls. Either way, dynamic Dubai and the ultimate shopping experience go hand in hand. Don’t doubt it. Not for a moment. However, should the experience leave you slightly underwhelmed – an unlikely outcome if ever there was one – then don’t worry. There are more shopping malls on the way!
For rising demand and a recovering economy are fuelling growth in Dubai’s retail sector, with a sharp increase in new mall space signalling the city and wider emirate is beginning to shake off the doldrums caused by the recent worldwide economic downturn.
According to the Oxford Business Group (OBG), a global publishing, research and consultancy firm which publishes economic intelligence on the markets of the Middle East, Africa, Asia and Latin America, projects previously put on hold have been reactivated and new developments are being put into the pipeline.
It all augers well for a destination which over the past decade has become the Middle East’s chief retail centre. The emirate is home to one of the largest malls in the world and boasts a reputation as a prime shopping location amongst well-heeled tourists.
The OBG cites a recent report by property consultancy Jones Lang LaSalle (JLL) which said some 371,000 sq metres of new retail space would be rolled out over the next two years. The flow through the development pipeline is expected to become stronger throughout the second half of the decade, as new projects are completed and some existing retail spaces expand to maintain their competitive edge.
Existing mall operators are feeling the push to renew, revamp and expand to keep at the front of the pack. In early September Majid Al Futtaim announced it would be spending $273 million to expand its Mall of the Emirates, while property developer Emaar Properties has unveiled plans to increase the floor area of its Dubai Mall by 93,000 sq metres.
However, the increased activity has led to some concerns that Dubai’s retail market is becoming overstocked, Iyad Malas, the CEO of developer Majid Al Futtaim Holding, does not agree. He told the OBG, “The market still hasn’t reached a point of saturation, which is evidenced by the healthy and natural inflow of brands to the market and shopping centres.”
Dubai holds certain advantages for retailers, with a young population, solid household consumption levels and a rapidly expanding tourism industry. The emirate is also seen by many overseas retailers as an indicator of the sector’s well-being in the broader region.
Mat Green, the head of research for CBRE in the UAE, said, “Retailers continue to expand into this region, often using Dubai as their launch platform into other markets such as Riyadh, Jeddah and Doha. According to CBRE research, 25 new retailers opened stores in Dubai last year.”
This is good news for mall developers, concludes the OBG, although with a number of projects set to come onto the market in the near future, competition to win the attention of retailers could be fierce.
Read more economic updates from the OBG here.