UAE Retail Rents Rise, New Malls Underway

 

 

Shopping malls are major tourist destinations in the UAE. In Dubai alone, more than 60 malls have been erected and eight more that are under construction. The Dubai Mall is currently the world’s most-visited shopping and leisure destination, attracting more than 60 million visitors each year. It attracts more visitors than New York City and Los Angeles. The Mall of the Emirates is also a key attraction in Dubai as it houses the largest indoor ski park in the world. Al Ghurair Group’s Burjurman has more than 300 stores and total retail floor area of 800,000 sq. feet.

According to real estate services firm CBRE, rents in prime malls have climbed by 10% in the past 12 to 15 months. The rise was primarily attributed to growing retail space in the country. Rental rents rose 5% - 6% in the second quarter of 2013. In Dubai, average rents were valued at $114 per sq. feet per annum while Abu Dhabi spaces stood at $71 per sq. feet per annum. Retail rents in secondary malls either dropped or remained flat from April to June this year. Craig Plumb, research head at Jones Lang LaSalle, said the average rent dropped to Dh 1,722 per sq, meter from Dh 1,862 per sq meter in the last quarter of 2012. The nearly unchanged rates were due to the competition in the market. Mr. Plumb added “vacancies are likely to rise in secondary markets”.

Although prime malls register 90% - 100% occupancy rates, rents are likely to continue rising regardless of the supply of spaces. Property analysts attribute the trend to strong domestic spending and new mall projects underway. CBRE’s head of research Mat Green said: “As more destination malls are delivered, retailers go to where there is thehigh potential for sales and football.”     

A number of new projects are in the pipeline including Al Ghurair Centre in Deira, The Avenue on Al Wasl Roaf, and the Mall of Arabia in Dubailand. The Mall of Emirates has announced a Dh1bn redevelopment project while the Dubai Mall has begun its first phase of expansion. The following shopping malls are currently under construction:

1. Grand City Mall Jebel Ali at Downtown Jebel Ali

2. Nakheel Mall at Palm Jumeirah

3. India Mart at Dubai International City

4. Palm Mall at Palm Deira

5. Great Dubai Mall at Dubai International City

6. SouqExtra at Al Barsha, MuhaisnahAl QuozDubai World Central, Ewan Residences

7. SM City Dubai at Al Mamzar

Mall developers said Dubai’s mall development and expansion projects were aligned with the new Tourism Vision 2020 announced by His Highness Sheikh Mohammed bin Rashid Al Maktoum.