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End of mega malls?
17 April 2012
Dubai's retail sector could grow by 5.1% annually till 2015 to reach AED174.8-billion (USD47.6 billion), according to Oryx Business Intelligence.
"Within the retail sector, store-based retail will continue to garner most of the revenue with a share of 97.3% in 2015. However, this will be less than current store-based revenue proportion of 98.5% in 2010," wrote Oryx analysts.
"Non-store based revenue will increase at a CAGR of close to 18% with growing broadband penetration in households and the emergent technologically savvy young generation. It will not be a significant proportion of retail during the forecast period but retailers will have to look at having an internet presence to gear up for the future. For instance, Carrefour launched its online store in UAE in September 2010 where customers can purchase a number of non-food items."
END OF MEGA MALLS?
However, the age of mega malls is coming to an end, as the industry focuses on localised centres and community centres, although Abu Dhabi is still building a few large shopping centres over the next two to three years.
Some of the older malls are also looking to reconfigure their offerings in order to compete with the Dubai Mall and Mall of Emirates, which have emerged as great tourist destinations.
"Some old or underperforming shopping centres may be redeveloped or converted to other uses," Oryx notes.
Real estate consultancy Cluttons concurs with the assessment, but states that the extensions to Dubai Mall, Ibn Battuta Mall and Dragon Mart as well as the restart of the once stalled Mall of Arabia, have helped demonstrate that retail supply is once again a focus.
ABU DHABI 'GROUND ZERO'
Dubai's retail sector is perhaps the only segment within the real estate market that's not expected to see massive supply coming online this year. After witnessing 162,000 square metres entering the market in 2011, only 6,000 square metres of retail space is expected this year.
However, Abu Dhabi is another story altogether as an additional 260,000 square meters of retail space will be available this year, on top of the 130,000 square metres that came on line last year, according to Jones Lang La Salle. The Reem Mall (expected completion by 2013), Yas Mall (expected completion 2012) and Al Wahda Mall Extension (completion expected 2012), are just some of the retail developments that will dot the crowded landscape.
Abu Dhabi is the new 'ground zero' for retail developments in the UAE with nearly 2 million to 2.5 million square feet expected to come on line by 2015, Oryx estimates.
In tandem with these developments, the UAE population is also expected to rise by a million over the next five years to reach 5.1 million by 2015.
"The increase in the urban population is one of the factors driving growth in the retail sector. The proportion of urban population in the UAE is over 80%. Dubai had an astonishing 98 per cent urban population in 2007. The population of Dubai in 2010 was 1.9 million and is likely to reach 2.9 million to 3.2 million by 2020, presenting an ever increasing market for retailers."
LOUNGING AROUND
Dubai Duty Free's decision to seek a USD1.1 billion loan is also a reflection of the continued growth expected in the tourism industry. Dubai Airports is looking to invest nearly USD8 billion in an airport expansion programme which would see the country raise its capacity from 60 million passengers to 80 million passengers by 2018. Dubai Duty Free's expansion will be in lock step with the greater airport developments.
Abu Dhabi airport also has ambitious expansion plans, which would also raise the gross leaseable space in the airports retail space.
With budget carriers FlyDubai and Air Arabia also looking to increase their network, and other emirates such as Ras Al Khaimah looking to launch their own airlines, the airport retail market should remain in an expansionary mode. © alifarabia.com 2012
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