The potential oversupply of shopping mall retail space coupled with the global downturn could force Dubai leasing rates down, according to a new report.
Over the next two years retail space in Dubai is expected to increase by 50 percent to over 3 million sq m which may not be sustainable, particularly in today’s economic climate, a Better Homes review of commercial space in the emirate said on Wednesday.
The report also predicted that older malls in Dubai would have to refocus their target market as footfall would suffer as a result of competition from new malls and the downturn.
In January, Arabian Business reported that retailers in Dubai were blaming their high prices on soaring rents putting further pressure on tourist spending, which some say is down by as much as 50 percent compared with last year.
Dipesh Depala, co-owner of independent fashion brand Ayesha Depala in Jumeirah’s Village mall, said the rent currently paid by his firm is reasonable, but that “prohibitive” rents in other malls have curbed the company’s expansion plans.
“We pay considerably less than we would in one of the larger malls. I’m not sure why the rents are so high in other areas,” he said.
The chief executive of Saudi-based Jarir bookstores, one of the largest retailers in the Middle East, recently told Arabian Business that his company is avoiding the Dubai market due to the high cost of setting up a showroom here.
Between 70-80 percent of total retail GLA (gross leasable area) is accounted for by shopping malls while total spending in Dubai for the year ahead is expected to be between $7.5-8 billion, said the report.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.