During the past few years, it has become more affordable for retail operators and service providers to expand and open new branches. The commercial property and rental prices in Dubai are on the decline. Moreover, the cost to rent commercially has also had a significant decline in the past three years. This decline is due to multiple factors including the spread of eCommerce and the growing availability of retail units across the city. Although, consumers are limiting their spending due to the effect of low oil prices on the UAE’s economy and multiple geopolitical factors that affect the city’s economic growth. Circumstances force some retailers to downsize operations or even to close their doors completely. However, through the combination of these factors, it is now possible for new players to enter Dubai retail market at a lower cost if you compare rates to a few years ago.
The current rate for renting retail space in shopping malls in primary areas of Dubai starts from approximately 250 Dhs per square foot and can reach up to 1500 Dhs. According to real estate brokers, shopping malls managers have become more flexible when it comes to accepting longer grace periods for interior decoration and negotiating lease agreements terms. At present, there are multiple prestigious locations to select from The Palm Jumeirah to International City, and more. However, naturally, businessmen prefer more established and popular areas. If you are looking to rent retail space in shopping malls in primary areas of Dubai, then please feel free to inquire here.
Meanwhile, Dubai’s population is constantly increasing. Multiple new residential communities are rapidly taking shape across the city. For the typical young and health-conscious consumer, it is very important to enjoy easy access to pharmacies, laundry shops, mini markets, fitness centers and beauty salons. Often the proximity of such services and stores dictates tenants’ choice of accommodation in Dubai. It is a matter of convenience all service providers and stores to be available under one roof. Also as the climate dictates in the Middle East, shopping malls are the most popular and most visited social hubs for residents for the variety of shopping and entertainment options on offer.
Shifting focus to the upcoming Expo 2020 Dubai, for multinational retail operators now it makes perfect sense to position their businesses to reap the benefits of the rare commercial opportunity. Dubai expects to welcome over 25 million tourists in 2020. Many of these tourists will likely explore the opportunities to relocate permanently to open businesses, to start new careers here, or even to retire along the waterfront and golf communities. Additionally, Expo 2020 Dubai, ahead of its due date is due to create over 300,000 jobs involving people who mainly work in the tourism and retail industry. Consumer spending in Dubai is on track to continually increase.
When it comes to opening new branches in Dubai, the first choice of retail operators is retail space in shopping malls. Also, fast food and casual dining restaurants owners prefer to establish their businesses in the shopping malls. As the weather in the UAE is not suitable for outdoor activities all year long, the shopping mall culture is widespread and here to stay. People simply are used to spending hours in air-conditioned, impeccably clean and secure large malls where every convenience service is available.
*Written by Gergana Mineva, certified Senior Real Estate Consultant (RERA 31104) specializing in commercial real estate, in prime areas including Palm Jumeirah, DIFC and Downtown.