Dubai, Abu Dhabi continue to be mall magnets

Waheed Abbas/Dubai
Filed on July 12, 2020 | Last updated on July 12, 2020 at 10.03 pm
Dubai remains a key hub and area of interest for global brands seeking to enter the Middle East.

(File photo)

Cities' status as economic hubs, spending power keep attracting international brands

Dubai and Abu Dhabi are recording high retail densities compared to mature global markets and are inching closer to the supply levels witnessed in the United States, according to a new study.

Data showed that the two UAE cities have a retail density per capita of 1.5 million sqm and 1.4 million sqm, respectively, in 2018-19 compared to 2.1 million sqm in the US. The two emirates have a higher retail density per capita than Australia, the UK, Japan, Riyadh City, France, Spain, Italy and Germany, according to global consultancy CBRE.

Dubai is expected to see a 8.9 per cent increase in gross leasable area (GLA), from 4.9 million sqm in the first half of 2019 to 6.9 million sqm by 2023, while Abu Dhabi will see a 6.5 per cent rise from 2.8 million sqm to 3.6 million sqm during the period.

"Dubai remains a key hub and area of interest for global brands seeking to enter the Middle East, with the city recently welcoming a variety of new multinational tenants including Lefties, Off-White, Urban Outfitters and Golden Goose, among others. However, this rapid increase is set to exacerbate the consequences of the existing high levels of supply in the market," said Anthony Spary, head of retail at CBRE.

Generally, Dubai retail supply is dominated by large-scale super regional and regional developments. Abu Dhabi, meanwhile, remains focused on local retail demand and homegrown concepts, dominated by convenience and neighbourhood centres.

Anis Sajan, managing director of Danube Group, said existing malls are doing well but new ones are unlikely to come up while retail areas will continue to grow in community developments.

"Existing malls are doing well. Demand for new malls largely depends on population and spending power of the people. Importantly, spending power in Dubai has not gone down much. For us, June was one of those months and July is also looking good from a retail perspective. Going forward, we are bullish because residents are staying within Dubai and spending level is also good," said Sajan.

Majid Al Ghurair, chairman of Dubai Shopping Malls Group (DSMG), has said with Dubai building its way back to full operations, malls are working towards speeding the recovery phase for the retail sector.

Baiju Kurieash, managing director of Buz Marketing, the consulting firm that manages DSMG, said the positive aspect of Dubai is in its advanced urban infrastructure, commitment and resilience to overcome short-term and long-term challenges.

"The push for retail, realty, F&B and tourism sectors has been addressed in a phased manner. With the city being in its last leg of the staged opening, the consumer and industry confidence is now on a positive trajectory," said Kurieash, consultant to DSMG.

In 2019, Abu Dhabi registered a total GLA of 2.8 million sqm. Moving forward, the UAE capital is expected to witness the delivery of an additional 800,000 sqm of GLA, or a 28 per cent growth by 2023.

The entry of additional supply is expected to result in increased market competition. Nevertheless, developments focusing on retail-tainment and experiential retail are expected to outperform the wider market.


Prior to the effects of the Covid-19 pandemic, CBRE said the retail sector in the GCC showed strong growth, with fashion and beauty in the region projected to add $6 billion (Dh22 billion) between 2020 and 2023, reaching $16 billion (Dh58.7 billion) market size in 2023.

However, even before these unprecedented events, retailers have been faced with challenges to their businesses. The shift to e-commerce has impacted the nature of retail dramatically - which likely will be further exacerbated by Covid-19. Particularly in the GCC, high levels of retail supply have resulted in a competitive and challenging market environment.


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