Q1 2016 Abu Dhabi Real Estate Market Overview by JLL

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Retail:
· No major completions took place during the first quarter of 2016 keeping retail stock at approximately 2.6 million sq m GLA.

· Approximately 63,000 sq m of retail GLA is expected to be delivered by the end of 2016 primarily within mixed-use developments. Thereafter, large malls are scheduled for completion in 2018 – notably Al Maryah Central Mall and Reem Mall amongst others.

· Average line store rents within well-located malls remained stable at AED 3,000 per sq m p.a. (Abu Dhabi Island) and AED 1,860 per sq m p.a. (off Island). Vacancies remain minimal within established regional and super regional malls.

· Consumer spending power from the resident population, combined with year-on-year increases to tourism arrivals supports continual growth of the retail sector – and potential a continued upgrading of the market with newer high grade shopping centres superceding existing outdated stock.

· During Q1 2016, while retail footfall has generally been maintained, there are signs of a short-term decline in retail spending – due to the reduction in employment growth and consumer confidence. While retail rents have remained stable, mall operators are expected to offer increased rent free periods, turnover rents and other leasing incentives to attract retailers.

· David Dudley commented “While significant retail space is set to enter the market from 2018, the development pipeline has reduced and demand growth remains positive from the spending power or the local population and continued tourism growth. The new malls, building on the success of Yas Mall will lead to a continual upgrading of this sector. With greater competition, we expect the market to polarise with lower quality malls needing to be re-positioned. In the meantime, retail rents are expected to remain stable.”

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