Wednesday, July 22, 2009

Dubai Shopping Malls

The evolution of Dubai's retail sector as a truly world-class shopping destination has been swift and phenomenal, and in this growth, shopping malls have played a key role. Dubai's shopping malls have removed the dichotomy of shopping and leisure, and created a perfect blend of retail and entertainment that appealed to families - both residents and visitors. The philosophy of mall developers in Dubai has been to design shopping malls as vibrant retail and leisure destinations. The Dubai Mall, for example, has redefined the shopping and leisure experience with its rich array of components including the world's largest indoor Gold Souk; one of the world's largest aquariums featuring 33,000 living animals; an Olympic-size ice rink; an entertainment section including the region's first SEGA indoor theme park; and KidZania®, an 80,000 square feet children's 'edu-tainment' centre.

Facts
  • Shopping mall supply accounts for over 70% of total retail GLA, with non-mall GLA representing less than 400,000 m² in total (Colliers International, 2009).
  • Occupancy rates of 98% - 100% in destination shopping malls, with average occupancy levels over 90% across market (Colliers International, 2009).
  • Shopping mall rents average US$ 1,200 per m² P/A, increasing to an average of US$1,800 in premium retail destinations such as Mall of the Emirates, Ibn Battuta Mall and Burjuman (Colliers International, 2009).
  • Anchor tenant rents average US$ 135 per m² P/A at present. Increasing competition for anchor tenants has reduced average rents for forthcoming malls to US$120 per m² P/A (Colliers International, 2009)

  • Estimated footfalls determined less by spending power and more by location and available leisure amenities – Mall of the Emirates currently achieves the highest footfall at 2 million visitors per month. Deira City Centre registers 1.5 million visitors and Ibn Battuta Mall hosts just fewer than 1 million visitors per month (Colliers International, 2009).
  • Mall of the Emirates, Mercato & Deira City Center continue to trade at close to 100% occupancy (Eye of Dubai, 2009).
  • Festival Center, Dubai Mall, and Dubai Marina Mall are all currently trading with noticeable unopened stores (Eye of Dubai, 2009).

  • GLA Per Capita set to increase to 2.35 m² in 2010, reduced to 1.14 m² when accounting for expected growth in tourism inflows. Retail sales, however, will have to grow at a steady YOY growth rate of 35% to sustain current performance trends (Colliers International, 2009).
  • The scale of forthcoming retail supply and increased competition is nevertheless expected to bring about an overall softening in rental rates at the market level.
  • Smaller and older malls will be required to reposition themselves to appeal to specific market segments, in order to reduce the impact of sharp vacancy increases and downward pressure on rental rates made likely by market oversupply (Colliers International, 2009).
  • New, larger malls with strong tenant mixes are expected to maintain current absorption rates, driven by strong economic fundamentals, continued brand diversification and the evolution of the ‘shopping resort’ concept towards greater incorporation of leisure amenities (Colliers International, 2009).
  • Established malls with sound anchorage, positioning and parking continue to deliver more stable rental income streams (Eye of Dubai, 2009).

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