Abu Dhabi retail sector driven by young wealthy population


Abu Dhabi retail sector is looking ahead to brighter prospects, with anticipated solid increase in sales and a swathe of new shopping developments set to be executed over the next 12 months. Such optimism is mainly caused by growing demand, which is currently triggered by a young and increasingly affluent population, as well as the steadily rising number of overseas visitors.

The Statistics Centre – Abu Dhabi (SCAD) said that per-capita income reached $85,850 in 2010. As such, the relatively young locals are ready to ensure long-term growth for Abu Dhabi retail operators since they have significant spending power.

A wave of new retail space is about to come onto the market to meet current and anticipated demand. Estimates by a real estate investment firm, Jones Lang LaSalle (JLL), put the amount of new retail area available at around 272,000 sq metres, twice the total of 2011.

Moreover, there is the prospect for more retail projects to be added to the development pipeline, as property consultancy Cluttons identified shortages of outlet space in a key segment of the market. The company said in a report released in the second half of 2012 that property values at a number of new residential developments in Abu Dhabi were being weakened because of the lack of retail facilities.

According to the report, “A shortage of retail facilities at many of the new residential developments needs to be addressed, the lack of which is seen as a culprit to falling values”. The report added that some new projects, such as plans to establish several retail units in the Marina Square development before the end of June 2012, would make the situation easier, in spite of the fact that the lack of retail space would remain a problem for many projects.

This flood of new retail space may also have an effect on established malls and shopping centres, making them consider upgrading and modernising in order to keep their appeal to regular customers and to reach out to new markets. Operators of the Al Wahda Mall said in mid-March that extensions to the shopping centre were almost complete, with the first of 256 new outlets being given to retailers in addition to the 200 already serving customers.

How does it feel to fly with the best ? The head of consulting at CBRE, an international property consultancy firm, Matthew Green, said that even though Abu Dhabi is a strong market it is still undersupplied and some of the new developments may find it challenging to attract customers from the older, more-established malls.

“There is considerable supply coming on-line, which will lead to softening of rents, but the major malls and the ones that are established are likely to continue to do well,” Green said for The National on March 16. “It is going to be difficult for the newer malls to come in and take consumers from those malls”, he added.

While developers seem determined to continue to roll out quality shopping projects, and retailers ready to take up the additional space, all players in the retail sector will need to watch carefully the balance of supply and demand. Some reports show that Abu Dhabi will have around 1.8m sq metres of retail space by 2015, averaging out to around 1.7 sq metres per person. This exceeds Europe’s average, which is just 0.23 sq metres, according to local media.

Nevertheless, the market is expected to manage to sustain such expansion. A recent report from JLL says that higher levels of investment by the government will drive a new round of economic expansion and, eventually, consumer demand.

The report, released on April 21, said that the spending power of the population, supported by the growth in tourism footfall, shows “there remains significant latent demand for the Abu Dhabi retail market, most of which is currently serviced by Dubai. The delivery of upcoming projects will help address some of this latent demand”.

Abu Dhabi seems determined to preserve the quality and variance its local retailers are known for, while following its plan to improve its own offerings and encourage shoppers away from regional markets. Consequently, the Abu Dabi retail sector should be able to absorb the significant growth in sales and keep its steady increase.


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