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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