On the shopping trail in Dubai

On the shopping trail in DubaiImage Credit: Supplied

Dubai has witnessed a seismic shift since 2004 in the total retail gross leasable area (GLA). With over 3 million sq m available from super regional to community retail, the variety is formidable. The strategy now by malls in Dubai and across the GCC focuses on delivering more than shopping experiences; they are places to meet and be entertained for families. From ski slopes, ice rinks to sky dive centres, malls are now providing a family experience. They are not just attractions during the hot summer months, but also in the pleasant winter climate. New retail offerings such as City Walk and The Beach offer outdoor retail, which are predominately food and beverage. There are new projects being developed as well such as Dubai Design District (d3) by Tecom, a new business park.

Retail trends

There is a shift towards community retail to serve local residents as everyday malls. My City Centre in Me'aisem is the latest community mall to be released to the market by Majid Al Futtaim. It provides 55 shops and is anchored by a Carrefour supermarket and Magic Planet. The purpose of a community mall is to provide essential amenities such as a supermarket, pharmacy and banks. The location within residential communities and ease of parking are key drivers for consumers choosing a community mall over a regional or super-regional mall. However, larger malls are positioning themselves in a different market and improving their access, such as links to the metro and additional parking. Mall of the Emirates has just added 1,300 car parking spaces.

There are press statements released by larger developers for an additional 600,000 sq m of GLA in Dubai over the next couple of years. With additional projects on hold, there is significant supply that could be delivered to the market. However, we do not expect all of these to be completed or delivered on schedule due to the size and complexity of the projects, which will allow the market to absorb existing supply and older malls to modify their position and shopping experience.

In a city renowned for its mega projects, Dubai has not seen a significant super-regional mall delivered in over five years. However, with the announcements of projects such as Mall of the World and Meydan One could help drive footfall into Dubai's retail tourism sector.

Tourism and retail

With Dubai International Airport overtaking London Heathrow as the world's busiest airport with 70 million passengers a year and the emirate's increasing hotel keys, the continued tourism drive with projects such as Dubai Parks is key. The retail offering will adapt as well with new tourists coming in as a result of new routes opened by Emirates and other airlines. The top three countries for tourists are Saudi Arabia, India and the UK. With global financial markets remaining precarious, the Russian economy under pressure and the Chinese economy faltering, we may see a continued slow down or reduction in consumers purchasing luxury goods. However, with sanctions on Iran being lifted, Dubai is poised to gain a new, large consumer market closer to home.

While Dubai has always positioned itself as a luxury destination, there are initiatives to attract a broader spectrum of the tourism market. The emirate has moved to increase the number of hotel rooms in the mid-market and budget sectors. This drive into a new market sector has been encouraged by incentives by the Dubai authorities and, therefore, early traction is expected. As new malls are developed we expect to see additional GLA being focused on this market segment to capitalise on mall footfall and spend. New activities and attractions are being created and the tenant mix is being enhanced in Dubai's malls to improve the length of stay of consumers.

Dubai is also positioned as a beach city destination, but length of stay is currently low compared with global cities such as London and New York. Having more affordable hotels in the city can address the problem and consequently support the retail market.

Obstacles to growth

The GCC retail market is developing rapidly with new mall projects in different country. This could affect consumer spend in Dubai. Saudi Arabia is one of the three biggest tourism markets for Dubai and with new malls and expansion projects under way in the country, we expect this to affect retail spend in Dubai, although it may not affect the number of tourists coming to Dubai as a weekend destination. This, coupled with higher prices of luxury goods in Dubai compared with cities such as London and New York, Dubai must ensure its positions to attract high spend per capita as well as footfall. This may be a short-term concern as the exchange rate fluctuations with the euro has allowed some retailers to purchase new product lines at reduced prices and help Dubai remain more competitive globally and attract retail consumers.

Dubai is dependent not only on the resident population but also on foreign visitors to support the existing retail GLA as well as planned projects. The emirate, therefore, must keep adapting and positioning itself to attract people to live, visit and enjoy its array of retail opportunities.

Get to know the reasons for newer developments to become more resident friendly in Dubai

Source: Mathew Daad, Special to Property WeeklyPW

The author is Partner, Commercial Leasing, at Knight Frank


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