Dubai facing mall oversupply as retail space surges

Emirate will see oversupply of over one million square metres of retail space in 2013, Abu Dhabi to fare better
Dubai facing mall oversupply as retail space surges
Dubai shopping mall space is set to increase by approximately 30 percent between 2010 and 2013
By Joanne Bladd
Mon 20 Dec 2010 08:54 AM

Dubai will face an oversupply of retail space by 2013 as
developers continue to build malls in a saturated market, Colliers
International has said.

"Dubai shopping mall space is
set to increase by approximately 30 percent between 2010 and 2013," the
real estate consultancy said in a report.

The market will see an oversupply of
over one million square metres of gross leasable area in 2013, it said.

"While the Dubai retail sector
does benefit from strong tourist demand, the fallout from the global financial
crisis is likely to have a dampening effect on this external demand," it
added.

The gap between prime and second
tier mall space is also likely to widen, the report warned.

“The discretionary spending habits
of consumes are shifting and we are seeing retailers purge their brand
portfolios in line with this,” said Stuart Gissing, regional director of
Colliers International, warning that landlords will have to fight harder to
keep their retail tenants.

“Currently we have a cat and mouse
situation with some landlords offering perceived relief positions by tweaking
their mixes or lease terms to attract new product. This is a very short term
tactic,” he said.

Neighbouring Abu Dhabi is expected to fare better. The emirate,
which remains undersupplied in leasable retail areas, is likely to see an
increase to 874,500 square
metres in 2013, and almost 1.1 million square metres in 2015.

“Abu
Dhabi [will be] a potentially balanced retail platform by 2015,” the report said.

Majid Al Futtaim (MAF) Properties, one of the Gulf’s largest
mall developers, this week said it was keen to expand into the Abu Dhabi market.

“We’ve
had some discussion in Abu Dhabi, but it’s very difficult to get the land that
suits us,” said CEO Peter Walichnowski.

Last
week, real estate consultancy Cushman & Wakefield predicted that 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.

“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,” the agency’s report stated.

 

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