Dubai retail market has witnessed a slow third quarter due to the Eid break and summer holidays. However, activity is expected to pick up in the last months of 2013 as demand continues to be buoyant and retailers remain quite upbeat.
Due to the quiet summer months, the top open market net rent for anotional standard shop in prime super regional centres has remained unchanged in Q3 2013 at around AED 5,700 per sq m, according to Jones Lang LaSalle’s Dubai Real Estate Market report for the third quarter of 2013.
The Primary Super Regional Malls continue to be very popular amongst both residents and tourists. Meanwhile, smaller community and neighborhood centres have been performing better, supported by stronger demand from a growing resident population.
The rising confidence and purchasing power in Dubai have also resulted in more demand for premium brands, a segment that was severely hit during the previous crisis.
With retailers struggling to find quality locations and the large primary malls largely full, there has been a growing demand for “street shops”. A clear example is the increasing number of F&B units opening on the Sheikh Mohammed Bin Rashid Boulevard in Downtown. However, this is Dubai’s top location and shouldn’t be considered as indicator for general performance.
Overall Dubai retail market continues to perform well, supported by positive sentiment, solid economic fundamentals, a growing tourism industry and a rising number of residents. We expect leasing activity to accelerate over the next 6 months.
Retail mall supply
The total stock of mall based retail space in Dubai remains steady at 2.8 million sq m recorded during Q3 with no major retail completions.
The last quarter of the year is expected to see a pick up in activity, with two of the most awaited retail centers, the Phase II of Al Ghurair City and The Phase I of The Avenue by Meraas, due to open before the end of the year.
Meraas will also be delivering The Beach project at JBR in 2014. Other notable upcoming retail centres include the Jumeirah Park Community Center and the Discovery Gardens Retail Center, both due in 2014 while the 100,000 sq m expansion of the Dragon Mart and the 67,000 sq m Agora Mall are scheduled for 2015.
Overall, by 2016, it is estimated that around 840,000 sq m of new retail space will enter the Dubai market.
With the Dubai retail performing strongly, an increasing number of new shopping mall have been announced. Those include the 400,000 sq m Phoenix Mall in International City, Phase II of Dubai Outlet Mall, the expansion of the Dubai Mall , the Art Centre in Barsha as well as Mall of the World as part of MBR City. Nakheel has also announced two retail main projects on Palm Jumeirah: The Pointe and The Palm Mall.
Several existing shopping malls have embarked on expansion plans. These include The Dubai Mall (93,000 sq m of expansion announced), Al Ghurair Centre (extra 35,000 sq m to be delivered soon), Dubai Outlet Mall (65,000 sq m of additional space), Mall of the Emirates and IbnBattuta Mall.
Large super-regional and regional centres are expected to continue to dominate the market, especially as the majority of announced and under construction malls have GLAs of more than 30,000 sq m.
