Dubai’s retail sector will continue to face challenges in the short term, but long-term prospects are bright, according to JLL.
In its latest Dubai real estate report, the global consultancy said the sector witnessed single digit rent declines in the second quarter of the year, confirming the fact that the market remained under pressure.
“While the short-term picture for retail in Dubai is challenging due to the slowdown in the rate of economic growth and the strength of the US dollar, the medium to longer-term picture remains more positive,” it said.
Given the high supply, landlords continued to adopt approaches to leasing that are favourable to tenants, in order to retain them, JLL said.
According to the report, only one neighbourhood retail mall was completed in Jumeirah Islands, adding 2,800 square meter (sqm) of gross leasing area (GLA). Nearly 220,000 sqm of GLA is currently under construction that is expected to be completed by year-end, with The Pointe on Palm Jumeirah and Marsa Al Seef in Al Hamriya expected to contribute more than 50 percent of the total. Dubailand will add nearly 40,000 sqm of GLA which is scheduled to be finished in the second half.
JLL said Dubai undoubtedly is the leading retail location in the Gulf region, with 3.39 million sqm of retail malls, ahead of other major cities such as Abu Dhabi (2.62 million sqm), Jeddah (1.21 million sqm) and Riyadh (1.17 million sqm). On an international scale, Dubai has approximately twice as much retail space per capita as London, indicating its reputation as a major international retail hub.
The consultancy said delays may occur given the soft market conditions.
“The pressure to complete and hand over projects is expected to intensify in the coming two years, in anticipation of the potential boost to retail spending around Expo 2020,” the consultancy said.
The retail sector, JLL said, continues to evolve, with retail brands and centres merging both online and offline experiences as lines between bricks and mortar and online retailers blur.
In the second quarter, the Dubai Chamber of Commerce and Industry said it expected e-commerce to account for 10 percent of Dubai’s total retail trade in the near future.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.
Subscribe to Arabian Business' newsletter to receive the latest breaking news and business stories in Dubai,the UAE and the GCC straight to your inbox.