The highly evolving retail market in UAE, not only has grown to be the first shopping destination in the region but it continues to attract shoppers and retailers alike from around the globe, as highlighted in Knight Frank’s latest report, UAE Retail Focus Autumn 2015.
Though retail supply per capita in the UAE is one of the highest in the world, the market is still performing well and has a lot of potential over the next decade. Growth in the non-oil economy, particularly the tourism sector, the increase of population and income and the upcoming international events (i.e. Expo 2020) are all pointing to a positive outlook for the retail sector in the UAE., according to the researches.
Forecasts from the IMF indicate that the UAE’s non-oil economy will grow by 3.4% in 2015 and 4.6% by 2020, outperforming many countries around the globe, while population, on the other hand, is expected to grow by 20% by 2020. Dubai and Abu Dhabi are strengthening their tourism profile by continuing to develop tourism attractions and enhancing the country connectivity. Dubai International Airport overtook London Heathrow as the world’s busiest airport with c. 70 million passengers and Abu Dhabi handled over 20 million passengers in 2014.
Recent development in the retail sector in Dubai has seen the focus shifted towards niche community centres, in addition to mall expansions where developers are counting on a better market positioning and a larger catchment. Recent expansion projects at the Mall of the Emirates and Dubai Mall, and the announcement of the 80m Sq ft Mall of the World, has emphasised the continued thrive of super-regional shopping malls as well as the high confidence held by developers on the potential growth.
Though accounting for only 12% of total retail supply in Dubai, mid-market community centres have been a growing segment. Dubai Design District (d3) has vowed to offer an alternative shopping experience woven around city art and creative industries.
Having currently 80% of its retail space within super regional malls, Abu Dhabi has seen a massive change in retail format since 2012 when super regional malls didn’t exist. The emirate is relying on its growing population and tourism offering to drive retail spending up. Recent tourism figures has shown a growth of 20% in number of guests for example (as per YTD August 2015), highlighting the resilience of the sector.
The UAE has cemented its position as the preeminent shopping destination in the region. Shopping among locals and GCC visitors is a popular leisure activity in its own right and both Dubai and Abu Dhabi have responded to the evolving regional demand by expanding their retail offering and enhancing entertainment attractions.
Local mall developers are keen to keep up with the growing demand by attracting new brands to the market, while international retailers are eying the UAE as their next shop address due to the country’s economic resilience compared to the waning global economy.