Footfall at Abu Dhabi shopping malls remained stable during the first quarter of 2016 but there are signs of a short-term decline in retail spending, according to a new report.
Consultants JLL said in its latest Abu Dhabi Real Estate Overview report the spending has fallen due to the reduction in employment growth and consumer confidence.
While retail rents have remained stable, mall operators are expected to offer increased rent free periods, turnover rents and other leasing incentives to attract retailers, the report said.
JLL said no major completions took place during the first quarter of 2016 keeping retail stock at approximately 2.6 million sq m.
About 63,000 sq m of retail space is expected to be delivered by the end of 2016 primarily within mixed-use developments. Thereafter, large malls are scheduled for completion in 2018 – notably Al Maryah Central Mall and Reem Mall, JLL added.
Its report said average line store rents within well-located malls remained stable at AED3,000 per sq m per year (Abu Dhabi Island) and AED1,860 per sq m per year (off Island) while vacancies remain minimal within established regional and super regional malls.
"Consumer spending power from the resident population, combined with year-on-year increases to tourism arrivals supports continual growth of the retail sector – and potential a continued upgrading of the market with newer high grade shopping centres superceding existing outdated stock," the report said.
David Dudley, head of Abu Dhabi Office at JLL MENA, said: “While significant retail space is set to enter the market from 2018, the development pipeline has reduced and demand growth remains positive from the spending power or the local population and continued tourism growth.
"The new malls, building on the success of Yas Mall will lead to a continual upgrading of this sector. With greater competition, we expect the market to polarise with lower quality malls needing to be re-positioned. In the meantime, retail rents are expected to remain stable.”For all the latest retail news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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