Gulf region still has room for more malls - research

SHOPPING VIEW: Retail International says there is room for more malls to be built in the Gulf region. (Getty Images)

There is still a market for new malls in the Gulf, with only Dubai consumers having access to the same amount of shopping that the average American does, new research on Wednesday suggested.

Barring Dubai, organised retail space in the region’s major cities is still well below the average US density of around 1.9 square metres gross leasable area (GLA) per person, according to research from retail consultancy Retail International.

Only Dubai is at parity with the US, with other cities in the Gulf notching up only half of what the typical American shopper has access to.

“Taking the GCC as a whole, the amount of new mall ‘footage’ under development is beginning to show signs of slowing as projects commenced during the boom years have been completed or are due for completion in the coming year, said director Simon Thomson.

Retail International’s latest yearly survey shows that 9.5 million square metres of mall Gross Leasable Area (GLA) has been completed in the Gulf, up from 7.75 million square metres a year ago.

The increase in retail space is almost identical to what it was in the previous 12 month period.

A further 4.3 million square metres is believed to be under development, down by 100,000 square metres from a year ago.

“Although only a small percentage, this equates to the reduction of a regional sized mall,” Thomson said.

Retail International estimates that there is an underlying potential in the longer term of around 5.9 million square metres, which if developed could bring the total GLA across the GCC to around 19.6 million square metres within the next 10 to 15 years.

However, the timing of these projects is now far less certain than it was 12 months ago, with some likely to be either deferred or shelved completely, Thomson added.

In the last nine years, almost 7.5 million square metres of retail space have been completed in the region.

“Without a return to the recent past boom conditions, a prospect currently looking so unlikely, such growth now seems unlikely to be repeated for years to come,” Thomson said.

Slowing tourism is also likely to have a negative effect on the sector, he said.

“With so much retail in Dubai predicated on tourism and its continued growth year on year an upheaval on such an unprecedented scale in the global economy is bound to have a significant knock on effect, with 37 percent of GDP in 2008 coming from the wholesale and retail sectors.”

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READERS' COMMENTS

Cheap consultancy at hard prices
Posted by mustadxb, Dubai, UAE on Thursday 26 February 2009 at 14:35 UAE time


Seems that "the experts" cannot keep lower profile and shut up even in those difficult times. Why are institutions over here still spending money for consultancy, they just copy past information from the west and a small local flavor to the comments. For sure, this will make some valuable savings for other essential expenses which are sound.

Retail prices here are far higher then in high labour and social expensive countries to whome they want us to be compared to.

Clone Malls
Posted by Paul, Dubai, UAE on Thursday 26 February 2009 at 10:16 UAE time


Mmmn. I think the 'experts' need to investigate this a bit further. It is fine banding figures around but really what they need to do is have some sort of demographics survey. Out of the population here, what percentage are labourers or people on a low income? Can they afford the latest fur coat or 'luxury' watch? No. Didn't think so. Malls here need to stop charging high rents and invite independent shops otherwise you will end up with the equivalent of clone towns like you have in the UK where it is the same shops in every town around the country. Factor in the cost of items here, around 40% more expensive than the UK plus poor customer service and consumer rights; why would you shop in the malls in Dubai apart from buying the essentials?

1.9sqm GLA per shopper or per resident?
Posted by Neil, Dubai, UAE on Thursday 26 February 2009 at 08:59 UAE time


Notwithstanding the genuine concerns expressed below over current oversaturation and the apparent fixation on malls in the region I wonder whether these experts are again selectively interpreting statistics to give them the 'facts' they are looking for?

Do their figures of 1.9sqm per person include every person currently resident or only those who realistically have any opportunity to spend money in an upmarket mall? Surely if they include the millions of labour camp residents then this is hardly a true 'apples with apples' comparison given the average purchasing potential of an american resident??

Retail supply
Posted by Gogi George, Dubai, UAE on Thursday 26 February 2009 at 08:39 UAE time


Statistics needs to be compared with the closest comparsion, comparing US density of retail availibility to ME retail stock is ridiculous,dynamics of both markets are very different, much of the local market in majority GCC states are floating population while US population is largely local. I hope that the consultants reflects realistic picture in the future.

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