Dubai retail market overview
According to the latest JLL report on Dubai’s real estate market performance, the total stock of shopping mall based retail space in Dubai at the end of Q1 2013 remains unchanged at around 2.8 million sq m. as no new projects were delivered in the first quarter of the year.
The major completion for Q2 2013 is Phase I of The Avenue by Meraas, adding 13,000 sq m of retail space. Other projects underway include the 35,000 sq m phase 2 of Al Ghurair Center due later in 2013, as well as the 158,000 sq m extension to Dragon Mart and The Beach by Meraas, a 5,000 sq m boutique mall on JBR with 40 F&B units, retail shops and entertainment area scheduled for 2014.
The main proposed retail centers for 2015 include the 112,000 sq m Dubai Pearl Shopping Mall and the 67,000 sq m Agora Mall in Jumeirah. However, the completion of this malls is not yet confirmed, neither it can be guaranteed by the developers.
The Nakheel Mall and the Pointe Mall, both located on The Palm Jumeirah, have been re-launched in Q1 2013 and construction is expected to start very soon. Again, a completion date and project delays are not discussed at this point.
Other large-scale shopping centers remain 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 the Phase II of Dubai Outlet Mall. Other projects that have commenced construction remain on hold (eg: Mall of Arabia.)
Many existing retail centers have recently launched expansion and redevelopment plans. These include Dubai Mall (93,000 sq m), Ibn Battuta Mall, Al Ghurair Center and Deira City Centre.
Large Super Regional Centres continue to dominate the Dubai market and constitute 66% of mall based retail space. Despite the entry of a number of community centers in the coming years, the share of Super Regional malls is expected to keep on growing and is projected to account for 78% of the total retail GLA by the end of 2015.
Rental Performance – Estimated Rental Value (ERV)
The top open market net rent for a notional standard shop in prime super regional centers has remained unchanged in Q1 2013. The premium 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. Secondary and older shopping malls continue to witness subdued demand, resulting in their rents and occupancy rates either remaining flat or dropping marginally.
The Dubai retail market continues to be supported by a number of factors, including population growth, an increase in the number of residents, as well as the strong inflow of tourists to Dubai.
Despite the strong retail supply pipeline, many of the upcoming shopping malls are expected to perform well, according to JLL. Most forthcoming projects have been planned to cater to a specific demand. The Beach project on JBR, for example, is targeting the growing population living in Dubai Marina, while the newly announced Nakheel Mall will meet the demand from residents of Palm Jumeirah.
As the resident population is growing, retail sales in community shopping malls are increasing year-on-year, in JLL views. Demand for household goods such as home furniture, electronics, as well as groceries and services (e.g. doctors) has been seen rising. On the other hand, e-commerce is also growing and it will take larger part of the spending customers from the retail stores in the shopping malls.
The best quality retail centers continue to display strong performance. However, secondary malls remain less popular and continue to struggle to attract demand, resulting in a widening the gap between primary and secondary malls. The majority of people now see the malls as places to pass their free time in better surroundings, socialise and dine.