Dubai to witness existing retail stock go up by 25%
Posted on 8th March 2017
Dubai can expect to see its existing retail stock go up by 25% in the next three years, what with nearly 800,000m2 of major retail supply forecasted for the emirate.
According to a report by real estate outfit Core Savills, the market should anticipate an overhang of retail supply owing to the many projects nearing completion, including Nakheel Mall, Pointe on the Palm Jumeirah, and The Dubai Mall expansion, not to mention the high number of malls looking to be operational in time for Expo 2020.
Dubai, despite its modest population, is already ranked second highest in the world – behind New York – in terms of mall density at 1,214m2 (GLA)/1,000 people and is due to show signs of peak market penetration, the report notes, according to Constructionweekonline news report.
David Godchaux, CEO of Core Savills, said: “Despite the softening regional economic conditions, demand from retailers has not seen a significant dip, with stable preleasing activity witnessed in The Dubai Mall expansion and other strategically located under-construction malls nearing completion. Furthermore, the super-regional malls (The Dubai Mall, Mall of the Emirates and Ibn Battuta Mall), which are located on the Sheikh Zayed Road, are all currently witnessing occupancies northwards of 98%.”
He added: “With the looming overhang of deliveries to escalate existing high levels of mall density in the next three years, the warning signs of market saturation have started to show. The strengthening dollar has caused a contraction in spending from Russian, British, and European tourists, while the lull in oil prices and ensuing austerity measures have affected the buying sentiment, particularly for discretionary spending of the GCC consumers. Ongoing flat rentals are yet to reflect these relatively lower margins and are straining the ability of some retailers to pay rent for the prime strips that they occupy.”
Godchaux pointed out that, having long shed its “emerging retail market” tag, Dubai has already established itself as a global shopping destination. He warned, however, that with its still increasing stock size, the emirate should be wary and make sure that its strength doesn’t end up becoming a “threat”.Back to all Construction News
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