Franchising, retail, business
07/03/2017
Next three years could see 800,000 sq m being created after a quiet two years
Dubai
After a relative lull in the last two years, Dubai will see a massive 800,000 square metres of new retail areas being added in the next three years, either through brand new malls or expansions at established locations. The push comes as master-developers use retail as a vital cog of their mixed-use developments currently in construction mode.
The 800,000 square metres represents a 25 per cent increase on the current available stock of 3.2 million square metres.
As it is, Dubai already has the second highest “mall density” in the world — at 1,214 square metres of gross leasable area per 1,000 people, and only behind New York, according to the new retail sector update from Core Savills. New York’s current retail area comes just under 2,000 square metres per 1,000 people.
And if all the planned malls do go ahead, Dubai stands more than a fair chance of taking the top spot for itself by the end of the decade. (Dubai’s population is pegged at 2.73 million.)
Massive new capacities are either fairly advanced in terms of development, such as The Dubai Mall expansion and Palm Jumeirah’s Nakheel Mall, or in the tendering phase, with the Deira Islands Mall being one.
Already, Dubai has a mall density nearly 380 per cent higher than London and 240 per cent of Paris, “although because these European markets have a stronger high-street market in addition to a much higher population base than Dubai”, the report adds. “Such high mall density is largely justified by Dubai’s very high visitor to tourist ratio of nearly 5.6 visitors per resident.”
And while local retailers may have their own views on it, the Core Savills report states that “Dubai offers the most competitive prime rents across global retail hubs”. “Luxury retail rents in Dubai are nearly 90 per cent lower than New York and almost 75 per cent lower than Hong Kong, London and Paris.”
According to David Godchaux, Core Savills CEO, “Although mature in its volume, retail offerings coupled with a strong B2C (business-to-consumer) network, Dubai’s retail sector largely remains an oligopoly. Demand is led by privately owned retail groups, which operate almost 90 per cent of global brands in Dubai.”
Also, the top 5 government-owned developers form nearly 87 per cent of the overall retail supply. “In a retail ecosystem such as Dubai, this close control makes the market relatively less elastic compared to other global markets which are typically driven by a much larger pool of offer and demand,“ said Godchaux.
Last year recorded only an 8 per cent addition in new shopping area in Dubai, pushing the total to 3.2 million square metres. The limited supply has helped maintain a certain balance, according to retail industry sources. “Too much of new stock would have meant increased competition for the shopper at a time when their spending is constrained,” the source added.
As for retailer demand for new locations, “Despite softening regional economic conditions, demand has not seen a significant dip,” said Godchaux. The pre-leasing activity for The Dubai Mall expansion is rated “stable”. The super-regional malls located on the Shaikh Zayed Road have occupancies higher than 98 per cent.
“The Dubai Mall, Mall of the Emirates and Ibn Battuta Mall will remain the top choice for existing and new brands to operate as the market starts to saturate,” the report says. “Low-rise pedestrian retail offerings are expected to gather pace as they add value to the residents by upgrading community living without losing the tourist appeal, capturing both these demand segments.
“On the other end of the spectrum, community centres which offer a well thought out tenant mix serving a strong captive market are expected to perform well, retaining retailers as well as minimising leakages — particularly for basic needs — to super-regional malls.”
By Manoj Nair, Associate Editor
L’idea di creare un blog giornaliero per il mondo del retail nasce grazie ai continui feedback positivi che riceviamo dalle notizie condivise attraverso diversi canali.
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