Dubai retail market saturated

Retailers headquartered in Dubai look to regional markets

Retailers, who have used Dubai as a base to open up their flagship property, are will now looking to other markets in the region, according to CB Richard Ellis (CBRE).

Matthew Jay, Senior Retail Analyst, CBRE Middle East, said; “Retailers already well-established in Dubai are looking to expand into the wider area, as Dubai is saturated in terms of shopping malls, with no short-term plans to open a significant retail space. These retailers have used Dubai as a base to open up their flagship property and will now looking to other markets in the region.”

Despite the increasing interest in Abu Dhabi, Dubai still captures most of the headlines. When the landmark Dubai Mall shopping centre opened in November 2008, it was far from full, but since the spring leasing has picked up and a number of new stores have opened. As a result of this and other mega-mall openings in Dubai over the past five years, smaller and older centres have been feeling the impact on footfall.

This situation has been intensified by the introduction of a major luxury area at the Mall of Emirates.

Fashion Dome has attracted an impressive new line-up of high-fashion brands including Christian Louboutin, Cartier, Paul Smith, Galliano, Versace, See by Chloe, Diane von Furstenburg and the largest D&G boutique in the region. Some of the mall’s existing brands, such as Louis Vuitton, Christian Dior and Gucci, have expanded into bigger units within the Fashion Dome.

As a consequence, malls well known for their luxury brands such as Deira City Centre and Burjaman have had to re-evaluate their positioning. Next year we are likely to see these and some other malls adjust their offer to find a new niche in a changing retail scene.

Dubai seems to have reached saturation point in terms of new schemes and those shopping centres scheduled to open over the next few years tend to be focused on Abu Dhabi.

In October this year the first of these, the 200,000 square metre Dalma Mall, opened and CBRE calculates that there is approximately 1 million square metre of  retail floor space due to come on line in the next three years. Projects include Yas Island, Reem Mall, 9712 Mall, Bawabat Al Sharq Mall, Emporium, Mushrif Mall, Deerfields Town Square, Mazyad Mall and Arzanah Project.

There is also the proposed opening of the 30,000 square metre Fujairah City Centre, located in the emirate of Fujairah, as well as a mall extension for Al Ain Mall in Al Ain, Abu Dhabi, both of which are scheduled for completion during 2011.

The retail scene continues to be dominated by shopping centres, largely because of the extremely hot climate, which makes air conditioning essential. This makes retail parks unsuitable and “big box” retail also remains fairly immature, although IKEA is to open a ‘big box’ unit at Yas Island in Abu Dhabi in 2011.

French grocery retailer Carrefour, which operates through local partner Majid Al Futtaim (MAF), has been very aggressive in it growth plans in the UAE. Its focus is on both hypermarkets and its smaller format Carrefour Express stores as part of its neighbourhood schemes.

A number of new entrants have come into the market, many brought by the largest mid-range fashion franchise operation, MH AlShaya. American Eagle, Pottery Barn, Pottery Barn Kids, Pinkberry and PF Changs have all opened stores in the UAE this year, while MAF’s Mirdiff City Centre has been the chosen location for many of these new entries.

Value fashion retailer Matalan has entered Dubai and also Abu Dhabi, while Crate & Barrel has taken a 2,500 sq m store in the Mall of Emirates through franchisee Al Tayer Group, its first store outside of the US.

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