Malls, malls and more malls – that’s the abridged version of the UAE retail industry’s five-year business plan.
With Dubai aiming to pull in 20 million tourists a year by 2020, and Abu Dhabi set to open grand projects like the Louvre and Guggenheim, it seems there will be no shortage of visitors and residents wanting to shop ‘til they drop, then shop some more.
As mall developers look to meet rising demand, here are Ben Flanagan looks at Benchmark’s top 10 trends in retail:
1. Megamalls to get even more mega
If you’re the owner of the world’s largest mall, there can only be one thing at the top of your in-tray… Make it even bigger, of course. As no strangers to the concept ‘bigger is best’, some of the UAE’s most prominent mall developers are embarking on ever-ambitious expansion plans. Dubai Mall, already the world’s largest shopping centre by total area (but not by leasable space), in 2013 commenced a 1 million square-foot expansion as part of a target to attract 100 million annual visitors. According to contractor Balfour Beatty, which won a Dh1.4bn contract for the work, the project is due for completion in early 2016. The Mall of the Emirates, home to Dubai’s indoor ski slope, is also in the midst of an expansion plan, as is Ibn Battuta mall, which plans to double its retail space in what will be its second large-scale expansion.
2. Mall of the World
Dubai also plans a new megamall that will indisputably be the world’s largest. It’s $6.2bn Mall of the World, being developed by Dubai Holding, is set to span 8 million sq. ft. and be part of a 48 million sq. ft “temperature-controlled city”. The project, launched by Dubai ruler Sheikh Mohammed bin Rashid Al Maktoum in July 2014, is expected to take three years to complete. It will include a network of shopping “streets” including The Celebration Walk, modelled on Las Ramblas in Barcelona.
3. Abu Dhabi on the up
It’s not all about Dubai. The UAE capital also has several major retail projects in the pipeline. Construction of a $1 billion shopping centre on Al Maryah Island, which is set to span 2.3 million sq ft, is scheduled to begin this year and complete in 2018. Part of the Al Maryah Central development, the mall will comprise 400 stores, 90 food and beverage outlets, a 20-screen cinema, a medical center and other facilities. Other projects include the long-delayed $1 billion Reem Mall. Matthew Green, the head of research and consultancy for the UAE at CBRE Middle East, said these big projects will address the relative lack of retail space in Abu Dhabi. “The market has been undersupplied for a number of years and still looks capable of absorbing additional retail space,” he told Benchmark. “Occupancy performance within the major malls reflects this, with Abu Dhabi Mall, Marina Mall, Wahda Mall and Yas Mall all running at or close to full capacity.
4. Community malls boom
Despite the bling bling of the big malls, smaller community shopping centres make up the majority of new retail developments in the UAE. There is “huge potential for community shopping malls all around the UAE, especially in Northern Emirates,” said Euromonitor’s retail analyst Diana Jarmalaite. These include Nakheel’s Circle Mall, expected to open in 2017, which the developer says will primarily serve residents of Jumeirah Village Circle. Nakheel also has the larger Al Khail Avenue in the pipeline, geared towards residents of Jumeirah Village, Jumeirah Park and other nearby areas. It is scheduled for completion in 2018.
5. The Palm springs into action
The Palm Jumeirah: Posh villas – check. Bling hotels – check. Private beaches – check. Decent shopping centre… checkmate. That said, the surprising lack of a significant retail presence on the manmade island is set to end, with two malls on their way. There’s the $220 million The Pointe mall, which Nakheel said in May is around 30% complete and set to open in 2016. About 100 restaurants and shops have already signed up to be part of the 1.4 million square foot waterfront development. The master developer is also building the Nakheel Mall, spanning an area of nearly one million square feet, and which is set to compete in 2017.
6. Dubai’s bite of the Apple
Apple fans will be right at home at the U.S. tech giant’s upcoming Dubai store, which is set to be the world’s largest, as well as the first in the Arab world. Rumour has it that it will be located in the Mall of Emirates and open in August.
7. More online shopping
Consumers in the UAE may be obsessed with their smartphones, but they’re not using them to shop as much as those in other markets. Online retail in the Emirates is still way below the average of developed countries like the US and UK. But, as endless press reports tell us, transactions are growing apace. Euromonitor forecasts online revenues will top Dh10.1bn by 2019, up from about Dh2 billion last year.
8. ‘Old Dubai’ development
Though the centre of Dubai’s gravity has shifted south in recent years, developers are not overlooking older parts of the city around the Creek. Nakheel plans a 1.1 million square meter retail, residential and leisure development at a four-island waterfront development in Deira.
9. Year of the Dragon Mart
Nakheel also plans to revamp the already massive Dragon Mart complex in Dubai, which will be rebranded ‘Dragon City’. The extension will add 1.3 million square feet of leasable retail space, increasing the total area of the China-themed complex to 11m sq ft.
10. Duty Free growth
Dubai Duty Free reported a massive $1.917 billion in sales for 2014, representing a 7.36 percent increase over the previous year – and looks almost certain to top $2 billion this year. That’s a lot of giant Toblerones.