WARNING: Mall overload in the UAE?
The value of the UAE’s retail market was estimated at $56.6bn at the end of 2016, according to recent data from Euromonitor International. The sector contributes around 11 per cent to the country’s GDP, while Dubai’s retail and wholesale sector accounts for a larger percentage (29 per cent) of GDP.
Emaar Malls received about 125 million visitors at its properties in 2016, marking an increase of 1 million visitors from the previous year. The number of visitors to Al-Futtaim’s shopping malls also grew to 119 million last year, up from 112 million in 2015.
New retail space
JLL said there was around a quarter of a million squares of gross leasable area (GLA) added in Dubai last year, marking the highest expansion rate since 2010. This brought total GLA to 3.4 million sqm by the end of 2016. No major change in supply kept the total GLA in Abu Dhabi stable at 2.6 million sqm.
Dubai and Abu Dhabi are expected to see GLA additions of 717,000 sqm and 467,000 sqm by next year.
Major projects that were completed in 2016 included the expansion of Dubai Festival City, Phase 2 of The Avenue in City Walk, and the Ibn Battuta Mall Phase 2.
Master developer Nakheel has awarded a construction contract to build Deira Mall – Dubai’s biggest shopping, dining and entertainment destination in terms of retail space – with a total investment of AED6.1 billion.
Nakheel has appointed United Engineering Construction LLC to build the mall, under a contract valued at AED4.2 billion. Construction will begin in Q3 this year, with completion in 2020. With four million square feet of leasable area, Deira Mall will be the biggest in Dubai in terms of shop space.
It will be located on a four million sq ft site, where vibro-compaction work is under way, at the heart of Deira Islands, Nakheel’s new, 15.3 sq km waterfront city that is part of Dubai’s 2021 vision. The four-island development, which will transform the area traditionally known as ‘Old Dubai’ into a world-class retail, tourism, living and leisure hub, will be home to more than 250,000 people when complete.
With a total built-up area of 10.3 million sq ft, including a 3.8 million sq ft multi-storey car park with 8,400 spaces, Deira Mall will feature over 1,000 shops, cafes, restaurants and entertainment outlets across three floors. The state-of-the art development will boast a retractable roof, bringing natural light into the complex and allowing open-air shopping in cooler months.
Deira Mall will be the centrepiece of Deira Boulevard, a new AED5 billion Nakheel community with 16 residential towers, nearly 3,000 apartments and extensive retail, restaurant and recreation space. Together, Deira Mall and Boulevard will have 4.5 million sq ft of shop space. A construction tender for Deira Boulevard was released in January this year.
Deira Mall is one of two large-scale retail projects by Nakheel Malls at Deira Islands. The other, Deira Islands Night Souk, is set to become the world’s largest night market, with 5,300 shops and almost 100 quayside cafes and restaurants. Construction is in full swing, with the project due for completion in 2018. All units at the Night Souk are fully leased.
Non-store retailing, mainly in the form of e-commerce activity, accounted for only 3 per cent of all sales in the UAE. However, momentum is gaining within this market segment, which is projected to see double-digit growth in the medium term.
Around 717,000 sqm of new retail space is expected to be added in Dubai by 2018, while Abu Dhabi is forecast to see a supply increase of 467,000 sqm over the same period. Demand for retail space is projected to see a moderate increase in the medium term, which may potentially lead to market saturation.