As of Q1 2013, total retail space across the Abu Dhabi metropolitan area stands at approximately 1.78 million sq m, according to JJL latest real estate report.
The retail stock increased by around 11,600 sq m of GLA during Q1 2013, primarily due to the partial opening of the Al Muneera and Al Zeina retail components.
A number of major new shopping malls are expected to be delivered later in 2013. These include Deerfields Town Square in Bahia, Emporium Mall at Central Market and Capital Mall in Building Materials City.
There have been major delays in the scheduled opening of new retail centres, but over 349,000 sq m of retail GLA is expected to enter the market by the end of 2013.
In addition to these new shopping malls, a number of other projects (including retail offerings within mixed-use developments) are expected to enter the market. These include units at Nation Towers, The Collection at The St. Regis and The Galleria on Sowwah Square.
By the end of 2015, total retail space across Abu Dhabi is expected to reach around 2.6 million sq m of GLA.
Composition of retail supply
No major deliveries took place in Q1 2013, so non-mall space continues to dominate the Abu Dhabi retail market, accounting for approximately 48% of total supply. Super Regional and Regional Malls currently account for 40% of total retail space.
Upcoming supply will increase the proportion of mall based retail space in Abu Dhabi over the next few years as multiple community and regional malls are delivered.
The upcoming retail supply is expected to change the retail dynamics in Abu Dhabi, improving the quality and retail mix.
Convenience retail and F&B offerings within mixed use schemes have helped attract demand.
The retail market in Abu Dhabi is still developing in terms of the amount of quality space and the diversity of its retail offering. Pending delivery of upcoming Regional malls, Marina Mall is the currently the main destination mall in Abu Dhabi.
There remains substantial demand for high quality Super Regional and Regional retail space. This will be addressed by the significant level of supply of Super Regional malls in the pipeline including Yas Mall, Saadiyat Mall and Sowwah Central.
Retail performance
A continuous growth in retail spending (derived from both the resident population and higher tourist levels), is supporting demand for retail space in Abu Dhabi. Due to the increase in retail spending some retail centers have increased their asking rents for select units during Q1 2013.
This did not result in an increase in the average rents of retail centers which have remained stable since 2009.
Compared to the past, retailers are now more cautious, adopting a more selective and strategic approach to expansion plans.
Vacancies remain minimal within established centers on Abu Dhabi Island, such as Marina Mall and Abu Dhabi Mall. Vacancies are much higher in newly completed shopping malls, with some opening with significant levels of vacant space.
While there are a number of large shopping malls in the supply pipeline, the majority of them are expected to materialize between late 2014 and 2018. They are not therefore expected to have a significant effect on the level of rents in the short to medium term.
