Retail rents in Abu Dhabi have held up since the third quarter of last year, sustained by a shortage in the supply of quality shopping options, a new report has said.
Jones Lang Lasalle said that although rents had fallen eight percent year-on-year, the decline happened between Q2 and Q3 in 2009, since when levels had stabilised.
As of Q2 2010, Abu Dhabi’s total retail supply stood at about 1.4 million sq m with only 36 percent of this in enclosed shopping malls, the report said.
Retail supply is expected to increase by more than 2.5 million sq m by 2013 with the majority of this being part of new mega malls.
But Jones Lang Lasalle said the UAE capital was currently suffering from an undersupply of retail options relative to the substantial spending power of the population and rising tourism spend.
Jones Lang Lasalle’s report estimated that the current shortfall is about 700,000 sq m. It added that occupancy rates in Abu Dhabi malls was more than 95 percent and there was a waiting list for the best quality shopping centres.
A report published earlier this month by Jones Lang Lasalle found that vacancies across Dubai’s major malls were increasing. The JLL report found that average vacancies across regional malls had increased to between eight to ten percent.
It added that expansion plans by retailers were either being “revised downwards or cancelled altogether”.
On the outlook for Abu Dhabi, the consultancy said that many consumers in Abu Dhabi were shopping in Dubai, resulting in a “loss of opportunity” for retailers in the UAE capital.
As a result, a “considerable future increase in high quality retail supply” could be expected in Abu Dhabi, softening retail rents at the same time.
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