_Dubai Retail Market Overview 2017

Consumer confidence in the UAE remained volatile in 2016 as shoppers were less optimistic about their personal finances and immediate spending. The retail market in Dubai experienced further softening in Q1 2017 as the strong dirham continued to dent retail sales in major malls. This in turn exerted pressure on retailers’ ability to meet the high rental rates imposed.

May 31, 2017

Despite this, well-established malls with higher footfall continue to maintain healthy occupancy rates, indicating continued demand for units in prime malls. However the delivery of additional retail supply is expected to put pressure on overall occupancy rates and consequently, a number of landlords have introduced flexible lease terms such as longer rent-free periods in order to retain their occupiers.

Meanwhile, the performance of smaller community and neighbourhood centres remained flat with marginal growth witnessed in select locations. These centres cater to the local resident population and are therefore able to ensure continuous revenue streams.

To ensure their permanence amid uncertainty and weaker sentiment, both mall operators and retailers are diversifing their product offerings and introducing new technologies as a means of reaching out to customers, with e-commerce being on the forefront of this evolution. This trend manifested itself in November 2016 when Mohammed Alabbar, Chairman of Emaar Properties, announced plans to launch Noon.com, an online retailer the size of Amazon. Similarly, luxury retailer Al Tayer launched its first online retail business called Ounass, serving the UAE, Saudi Arabia and Qatar.

Our long-term view remains optimistic as Dubai’s retail market is strongly supported by the hospitality sector. The delivery of Dubai’s theme park complex along with the Dubai Opera and other demand generators is expected to drive demand for the hospitality market, which will undoubtedly have knock-on effects on the retail market. This is maintained by on-going investment in the supporting infrastructure namely Dubai International Airport (currently the largest in the world in terms of passenger traffic) and Al Maktoum International Airport.

Read the latest Dubai Retail Overview in full here.