By Joanne Bladd
Mall space in the capital to double, as construction wanes in saturated Dubai market – report
Abu Dhabi is set to overtake Dubai’s saturated mall market in the next five years with one of the heaviest concentrations of retail space in the world, a report has said.
Retailers are increasingly focusing on the UAE capital, where retail space is set to swell some 80 percent to more than 1.8 million sq m by 2015, said property consultants Cushing & Wakefield, accelerated by a slew of new malls.
By contrast, Dubai will gain little new stock after construction on several malls was suspended following the emirate’s real estate crash, the company said.
“With limited pipeline supply in Dubai and Abu Dhabi shopping centre supply set to more than double, the focal point for retail in the UAE may well be set to shift.”
Abu Dhabi currently houses 936 sq m of retail space per 1,000 people, significantly lower than Dubai’s 1,385 sq m.
The US, by comparison, offers 1,028 sq m per 1,000 people, while Europe houses a comparatively modest 231 sq m per 1,000 people.
“Abu Dhabi’s retail market is undersupplied,” the report said. “The average occupancy rates of malls in Abu Dhabi is approximately 90 percent.”
By comparison, vacancies at Dubai malls are on the rise as retailers seek out new real estate at the expense of older shopping centres, which struggle to lure consumers.
“Despite strong tourism and a projected rise in consumer spending, there has been an increase in mall vacancies, particularly in tier two locations that do not attract the same footfall as the ‘mega malls’,” the report said.
Dubai’s reliance on luxury brands may also threaten the health of its retail sector, it added.
“Dubai has a staggering number of shopping centres devoted to high-end consumers. More localised centers that create or enhance communities are expected to fare much better.”
Matthew Jay, an analyst at real estate firm CB Richard Ellis, said retailers increasingly saw Dubai as a springboard to Abu Dhabi and other Gulf markets.
“Abu Dhabi has emerged as the main focus,” he said. “Retailers already well established in Dubai are looking to expand into the wider area, as Dubai is saturated in terms of shopping malls.
“These retailers have used Dubai as a base to open up their flagship property and will now looking to other markets in the region.”
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