Shopping Paradise


London claimed pole position, attracting 55.5% of the international retail brands surveyed, followed by Dubai (53.8%), New York (43.9%), Moscow (43.7%), Paris (43.7%), and Hong Kong (40.5%). “Retail has been […]

London claimed pole position, attracting 55.5% of the international retail brands surveyed, followed by Dubai (53.8%), New York (43.9%), Moscow (43.7%), Paris (43.7%), and Hong Kong (40.5%). “Retail has been one of the fastest growing industries and one of the leading drivers of economic growth in the UAE in recent years,” said Hamad Buamim, Director General of the Dubai Chamber of Commerce and Industry, mainly due to the rising population, expatriate wealth, strong household consumption, modern retail concepts, and a thriving tourism sector. The population of Dubai broke the 2 million mark in 2011 and is expected to amount to some 3 million by 2020. Average Emirati household spending totaled $23,000 per annum followed by Western, other Arab, and Asian households with an average of $19,500, $13,500, and $10,000, respectively.

Dubai’s retail landscape is dominated by malls and megamalls, which by the end of 2011 offered 2.58 million sqm of floor space, compared to, for example, 4.1 million sqm of mall space in Paris and 1 million sqm in London. Of course, both Paris and London offer more than just malls. On the other hand, if population size is taken into consideration, Dubai has 1,385 sqm of shopping space per 1,000 people, which far surpasses the US with 1,028 sqm and Europe with 231 sqm per 1,000 people, according to property brokers Cushman & Wakefield.

There is but limited construction on the Dubai retail front. Not more than 5,700 sqm of retail space is scheduled for completion in 2012, with no major projects expected before 2015. Currently, nearly 60% of Dubai’s total retail space is in large centers such as the Dubai Mall and Mall of the Emirates. Situated at the foot of the world’s tallest manmade building, Burj Khalifa, the Dubai Mall is the world’s largest shopping center. The size of 50 football fields, it is home to some 1,200 retail outlets, two department stores, and over 160 food and beverage outlets.

But, like any modern shopping facility, the Dubai Mall offers more than retail. It boasts an ice skating rink and a 22-screen cinema, while the 275-meter-long fountain in front of the complex serves up daily spectacles shooting water up to 150 meters into sky. The mall’s most dominating feature is the Dubai Aquarium. Measuring 51 x 20 x 11 meters, it is one of the largest fish tanks in the world, home to more than 33,000 aquatic animals, including over 400 sharks and stingrays.

Partly thanks to such extra features, the Emaar-owned Dubai Mall became the world’s most-visited shopping and leisure destination in 2011, attracting more than 54 million visitors, a 15% increase when compared to 2010, and surpassing the 50.2 million annual visitors to New York City.

Owned by Majid Al Futtaim Properties (FAP), Dubai’s second biggest mall is the Mall of the Emirates (MAP). It has a total surface area of some 600,000 sqm, over one-third of which concerns retail. It is furthermore home to 520 stores and 80 cafés and restaurants. In addition, the mall offers the Magic Planet family entertainment center, a 550-seat, two-level theater, a 14-screen cinema complex, and Ski Dubai; 22,500 sqm of year-round snow offering five runs, the longest of which is 400 meters.

The Emirates’ third biggest mall is also owned and run by FAP. The Deira City Center offers 120,000 sqm of retail space, a gaming area, and an 11-screen cinema complex. It attracts some 20 million visitors a year. Faced with the competition of such modern megamalls, Dubai’s older, smaller malls are suffering and will have to reinvent themselves by investing in leisure and entertainment facilities.

Any account of Dubai’s retail scene would also be incomplete without mentioning the Dubai Shopping Festival (DSF). Organized since 1996, the one-month shopping and entertainment event in 2011 attracted some four million visitors, who spent over $4.1 billion on retail, travel, and hospitality.

According to Jones Lang LaSalle (JLLS), the average store rent per square meter in Dubai amounted to some $513 in 2011. The property consultancy firm expects the presence of megamalls in Dubai’s retail landscape to gradually decline in the coming years. “A lot of the mega retail projects that were planned during the boom years were put on hold or canceled after the financial crisis of 2009,” Craig Plumb, the firm’s head of research for the MENA region, told The Wall Street Journal in March 2012. He expects a shift toward smaller malls and retail projects targeting tourists and residents alike.

The biggest project on hold since 2009 is the Mall of Arabia. The brainchild of Dubai Holding, it was set to offer a gross leasable area of some 372,000 sqm, which would have made it both Dubai’s and the world’s largest mall. Meanwhile, Emaar announced it was to construct a 93,000 sqm extension to the Dubai Mall, while Dubai-based property developer Nakheel has a renewed interest in building the Palm Mall at the Palm Jumeirah Island off the coast of Dubai. It is also aims to extend the Ibn Battuta Mall and Dragon Mart. So far, however, the firm has not publicized any further details.

Regarding future growth, Dubai, on the one hand, will have to reckon with increased competition within the region, especially from Abu Dhabi and Qatar, which follow a Dubai-like growth model based on retail, tourism, and entertainment. The amount of retail space in Abu Dhabi is set to almost double to 1.8 million sqm by 2015. On the other hand, there is increasing demand.

Fuelled mainly by growing population and tourism numbers, retail sales in the UAE alone are forecast to grow from an estimated $31.01 billion in 2011 to $41.22 billion by 2015, according to Business Monitor International (BMI). Automotive sales are also expected to increase by some 49% to 600,672 units by 2015. Sales of consumer electronics are set to grow from $3.15 billion in 2011 to $3.97 billion by 2015. Food sales are forecast to grow by 36.1% to $10.52 billion by 2015. Fashion and clothing is another major market. The 2011 Retail Apparel Index found that the UAE had the highest fashion clothing sales per capita per annum in the developing world. The report attributed that to “high disposable income and immense fashion consciousness.”

While store-based retail will continue to dominate the sector in the coming years and generate the most revenue with a share of 97.3%, non-store based revenue will gradually increase by some 18%, as more and more households have access to broadband internet access. Carrefour, for one, launched its first online store in September 2010. The drift from bricks and mortar retail facilities to their virtual rivals is likely to pose a challenge to Dubai’s retailers. However, with retail so much intertwined with the city’s tourism industry, the future impact of online retail will likely be muted.