CBRE says Dubai is world's top destination for big names; Kuwait City, Riyadh also in top 20
Dubai is now the most sought after location for expansion for international big name retailers, alongside London, real estate analysts CB Richard Ellis said on Monday.
CBRE's annual survey - which mapped the global footprint of 323 of the world's top retailers across 73 countries - found that Middle East markets were attracting an increasing number of big name retailers and are competing with established global retail centres.
It said Dubai now shared the top position with London as the most targeted retail destination.
Kuwait City and Riyadh also maintained key positions in the top 20 ahead of many established destinations.
The UAE placed second to the UK as the most highly penetrated global market, attracting 54 percent of all international retail brands surveyed.
The UK maintained its position as the world's most international retail market for the fourth year running with 58 percent, while the US made up the final position in the top three with 50 percent.
Other Middle East countries fairing well in the study were Saudi Arabia (11th), Kuwait (14th), Bahrain (29th), and Qatar (=30th).
Attracting more than half of all international retail brands surveyed, Dubai now equals London as the most popular retail city in the world.
With 1.2 million square metres of retail space having come on to the market since 2006, a wealthy consumer base, and very little competition from local retailers, Dubai's stature as a key destination for international retailers has grown quickly.
A further trend has been an influx of US-based retailers in the last 18 months. Traditionally US retailers have been reluctant to adopt the retail franchise model that is commonly used in the Middle East; however, with limited opportunities for growth in their own markets, more retailers have taken the plunge and made inroads into the region, typically using Dubai as a springboard into the region's other markets.
Michael Leighton, senior retail consultant, CB Richard Ellis Middle East, said: "Historically, Dubai has been the entry city to the Middle East, but now retailers are looking to replicate their success in other Middle Eastern countries with a similar consumer base.
"Essentially this means a wealthy, well educated, and well traveled population with a high propensity to use modern shopping malls.
"Kuwait and Saudi Arabia fit the bill, as does Abu Dhabi where two new shopping centre openings is likely to make it a bigger destination for new entrants than Dubai next year. The recent unrest in the Middle East cannot be ignored, but it is unlikely that this will have any long-term impact on retailers' desires to expand into the region."
Dubai and London are followed in the top retail city rankings by the established markets of New York, Paris, and Hong Kong.
The CBRE report said international expansion remained a key strategy for retailers throughout the world, with 40 percent of new openings occurring outside the retailer's home region.
Even though the pace of expansion has slowed, with the overall footprint increasing by two percent compared with 12 percent in 2008, some 21 countries saw five or more new retailer entrants last year.
Following the large number of new entrants in 2009, the UAE fell back slightly in 2010 in terms of new store openings.
However, this was relative to the high proportion of retailers already present in Dubai and retailers remain active in the region, with Kuwait (six new entrants) and Saudi Arabia (five) proving popular.
Dubai was the top target for Asian retailers targeting markets outside their home region (22.9 percent) and was second only to London as the top target for American retailers.