Dubai Retail Market Performance in Q2 Overview

Dubai’s retail market continues to perform well, supported by the solid economic fundamentals of Dubai, the strong inflow of tourists and the increase in the number of residents, according to Jones Lang LaSalle Dubai Real Estate Market Overview Q2 2013 report .

The top open market net rent for a notional standard shop in prime super regional centres has remained flat in Q2 2013 at around AED 5,700 per sq m. The Primary Super Regional malls such as Dubai Mall and Mall of the Emirates continue to dominate the market in terms of footfall, sales volumes, rental values and occupancy rates.

With demand for retail growing and consumer spending improving, some older shopping malls, such as Deira City Centre or Bur Juman, have started revamping their facilities in an attempt to position themselves as modern destinations that can compete with the large newer shopping centres such as Dubai Mall.

As the resident population in Dubai is growing, community and neighbourhood malls have been performing well, catering to the needs of their surrounding communities. In general, those small-scale centres accommodate the demand of households and comprise retailers such as home furniture shops, electronics, groceries and services (e.g. doctors’ clinics).

Overall, the retail market in Dubai continues to improve. The large primary centres remain very popular and are filling up quickly. With those centres becoming saturated, secondary malls might start to see some benefit in the coming months as retailers are unable to secure prime locations in the primary super regional centres.

Retail mall supply

With no new major completions, the total stock of mall based retail space in Dubai remains unchanged at around 2.8 million sq m in Q2 2013, while the much awaited opening of Phase I of The Avenue by Meraas has now been postponed to Q3 2013.

In the second half of the year, we expect the delivery of 48,000 sq m of retail space, including the 35,000 sq m phase 2 of Al Ghurair Centre, and the 13,000 sq m Phase I of The Avenue.

Other proposed retail projects for 2014 and 2015 include The Beach by Meraas, Phase II of Dragon Mart, Discovery Gardens Retail Center, The Outlet Village in Al Barsha, Jumeirah Park Community Center all due for opening in 2014 while the Dubai Pearl Shopping Mall and the Agora Mall in Jumeirah are both scheduled for 2015.

The Nakheel Mall and the Pointe Mall, both located on The Palm Jumeirah, have been re-launched and construction is expected to start very soon.

A number of large-scale shopping centres have also been announced but not yet under construction. These include the 200,000 sq m Phase II of the Avenue, the 400,000 sq m Phoenix Mall in International City, Bawadi Mall in Dubailand, and Phase II of Dubai Outlet Mall. Other projects that have commenced construction remain on hold (eg: Mall of Arabia).

A clear trend in the market remains the expansion plans of some of the existing super regional centres such as The Dubai Mall (93,000 sq m of expansion announced), Al Ghurair Centre (35,000 sq m of expansion), Dubai Outlet Mall (65,000 sq m of additional space), Ibn Battuta Mall and Festival City.
Large Super Regional Centres continue to dominate the Dubai market and constitute 66% of mall based retail space. Despite the upcoming entry of a number of smaller community centres, this share is expected to be maintained in the coming years.

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