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Abu Dhabi to boost retail space
Issac John / 21 December 2010
DUBAI - New shopping centers and expansions of existing facilities will soon make Abu Dhabi one of the most retail-concentrated cities in the world, according to London-based global property broker Cushman & Wakefield,
Abu Dhabi is set to surpass Dubai’s per capita retail concentration by the year 2015 when its retail space doubles to nearly 1.8 million square metres, Cushman & Wakefield said in its report.
Abu Dhabi offers an estimated 936 square metres of shopping space per 1,000 residents, it added. Dubai now offers more than any other city — 1,400 square metres of shopping space per 1,000 people. The US has about 1,000 square metres per 1,000 people, and European countries have just over 200 square metres per 1,000 people, the London-based experts said in the report.
While Dubai and most other major cities aren’t anticipating significant retail space expansion over the next five years, Abu Dhabi has plans for new shopping malls on the scenic Reem and Yas Islands, the report stated. Projects planned for the next five years will push Abu Dhabi’s retail concentration to 1,700 square metres per 1,000 people, the company said.
According to Cushman & Wakefield, retail occupancy rates in Abu Dhabi presently hover around 90 per cent. However, the new retail venues will likely saturate the market.
“That’s good news for renters as they begin entrepreneurial ventures, and it’s also good news for communities. As traditional malls become commonplace, market forces will encourage innovation,” the London-based broker said.
“Community developers envision well-planned town centers that serve not only as places to shop, but also as places for fine dining and other leisure activities,” it added. The Abu Dhabi Mall is one example of a shopping center that’s becoming a town center, Cushman & Wakefield said. The mall opened in 2001 with 220,000 square metres of floor space, but today it features a range of family and corporate housing options in addition to more than 200 retail outlets and 40 restaurants, it added.
Global real estate consultants Colliers International projects for Abu Dhabi a potentially balanced retail platform by 2015 while Dubai shopping mall space is set to increase 30 per cent by 2013 leading to an oversupply in retail rental market. “Abu Dhabi, which remains undersupplied in leasable retail areas, is likely to see an increase to 874,500 square metres in 2013, and almost 1.1 million square metres in 2015,” said Colliers in its report.
As developers continue to build malls in a saturated market, the market will see an oversupply of over one million square metres of gross leasable area in 2013, the report said.
“While the Dubai retail sector does benefit from strong tourist demand, the fallout from the global financial crisis is likely to have a dampening effect on this external demand,” it added.
The gap between prime and second tier mall space is also likely to widen, the report said.
Stuart Gissing, regional director of Colliers International, warned that landlords will have to fight harder to keep their retail tenants. “The discretionary spending habits of consumes are shifting and we are seeing retailers purge their brand portfolios in line with this,” he said.
“Currently we have a cat and mouse situation with some landlords offering perceived relief positions by tweaking their mixes or lease terms to attract new product. This is a very short term tactic,” he said.
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