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Sun 21 Jul 2019 09:23 AM

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Dubai malls turn to tech in face of retail sector oversupply

An additional 600,000 sq m of retail space is expected to enter the Dubai market by the end of this year

Dubai malls turn to tech in face of retail sector oversupply
Total mall-based reply supply stood at around 3.8 million sq m at the end of the quarter, with the expansion of Dragon Mall being the only project completed during the quarter.

Footfall will continue to be a challenge for retail malls in Dubai and the greater UAE in the face of coming oversupply and the rapidly increasing adoption of e-commerce, according to real estate consultancy JLL.

According to a recent JLL report on the real estate sector in Q2, market rents in Dubai primary malls have declined by approximately 14 percent, compared to 24 percent for secondary malls when compared to the same time period last year. Additionally, market rise vacancies are estimated to have risen from 14 percent in Q2 2018 to 18 percent in Q2 2019.

Total mall-based reply supply stood at around 3.8 million sq m at the end of the quarter, with the expansion of Dragon Mall being the only project completed during the quarter.

Another 1.6 million sq m of retail space is expected to enter the market by the end of 2021, with over 600,000 sq m due to be complete by the end of this year.

“We think footfall will continue to be a challenge, especially in the face of upcoming supply,” JLL Mena research associate Dana Salbak told Arabian Business, noting that upcoming additions to Dubai’s retail space include Meydan Mall, Dubai Hills Estate Mall and Nakheel Mall on Palm Jumeirah.

“These are all super regional malls, and there’s also the challenge of e-commerce,” Salbak added. “In terms of how expensive it’s become for shoppers, and oversupply and choices, that’s always going to be a threat.”

New strategies

Salbak added that many malls and retailers have been forced to search for new strategies to boost dwell time, operating performance and the tenant mix of their projects, particularly in the face of the rise of online retail and a consumer shift away from luxury brands.

“A consequence of that has been that a lot of retailers have had to come up with innovative solutions and strategies,” she said. “MAF [Majid Al Futtaim] for example has partnered with Will.I.Am to introduce AI into Carrefour and cinemas, and you have a lot of random stores with robots….people are focusing on these kinds of elements to secure consumers and football into their stores."

In 2020, a Dubai-based tech firm known as ‘Mall.Global’ plans to launch a digital mall, which will provide over 2,500 brands and experiences that will combine immersive technologies and operational practices like brand immersion, virtual reality, on ground AR cues, micro influencer reviews and multi-cryptocurrency acceptance.

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