Dubai a Preferred Choice for Global Retailers

Published May 15th, 2018 - 07:41 GMT
Occupancy rates of prime malls - such as Dubai Mall, Mall of Emirates and Ibn Battuta Mall - are still running around 95 to 98 per cent. (Shutterstock)
Occupancy rates of prime malls - such as Dubai Mall, Mall of Emirates and Ibn Battuta Mall - are still running around 95 to 98 per cent. (Shutterstock)

Dubai maintained its status as a global destination for shoppers as the emirate ranked the second top target market for new retail entrants surpassing global retail hotspots such as London, Tokyo, New York and Paris, shows a new research released on Monday.

According to global consultancy CBRE's report, Dubai was the target of 59 new global brands followed by Taipei (52), London (49), Tokyo (46), Toronto (40), Singapore (38), Bangkok (30) and Abu Dhabi (24). Hong Kong topped the list with 86.

Among the countries, the UAE was ranked second after Hong Kong for new entrants with 63 and 86, respectively. The other top markets for new entrants were UK (54), Taiwan (52), Germany (51) and Japan (47).

Hamad Buamim, president and CEO, Dubai Chamber of Commerce and Industry, said the report proves that Dubai continues to be an attractive market for international retailers.

"One of the major advantages of having a presence in Dubai is its excellent infrastructure, hence, it continues to attract brands and consumers from other parts of the world," Buamim said.

Gaith Shocair, CEO of shopping malls at Majid Al Futtaim Properties, said Dubai's status as the topglobal shopping destination underscores the long-term potential of the home market.

Buamim said Dubai has right fundamentals in place. "We have had challenges therefore we relaunched retail business group to work together to voice their common issues. We are trying to keep Dubai competitive by keeping international businesses here and also by growing local retailers," Buamim added.

While addressing the opening speech at the launch of the report, Buamim stated that since Dubai has been growing and attracting international players and is reaching maturity level. Therefore, the margins have also started to drop as competition increases.


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"Five years ago, people were expecting double-digit growth with double-digit margins. Because Dubai continued to attract international retailers, market became competitive and margins reduced," he said.

"Dubai's retail sector continues to see significant expansion of supply despite a general softening of market conditions over the past 24 months, which has resulted in falling rent and rising vacancy," CBRE analysts said in the report.

Over the next 3 years, they said more than 1.5m sqm of new retail space could be delivered to the Dubai market, adding roughly 50 per cent to the existing inventory. This amount to around 70 per cent of the total future retail supply for the UAE over the same period.

Nick Maclean, managing director, CBRE Middle East and Turkey, said Dubai remains the most attractive market in the region for retailers, with many using the emirate as a "launch pad" for regional expansion.

"Advancements in retail technology and e-commerce have, however, forced retailers to rethink their strategies. Several retailers are changing their approach in the market with a focus on opening digital platforms and increasing operational efficiencies," Maclean said.

Natasha Patel, director in CBRE's global research team, said major malls are commanding huge premiums over the wide market average while secondary centres are making significant rent reductions to attract new tenants and to retain existing brands.

Occupancy rates of prime malls - such as Dubai Mall, Mall of Emirates and Ibn Battuta Mall - are still running around 95 to 98 per cent.

Patel said despite weaker consumer sentiments caused by lower oil prices and the emergence of more challenging domestic market conditions, Abu Dhabi's retail market attracted a host of new international retailers in 2017. "Most these were F&B brands including Coya and La Petite Maison, followed by mid-range fashion brands... Dalma Mall, with 150,000 sqm of gross leasable area also welcomed a number of new global brands from Asia, Europe and North America," she said.

Nadeem Khanzadah, a retail industry veteran in the UAE, sees softening of the local retail industry as a temporary phase.

"I believe Dubai will tide over the slowdown as Middle East and Dubai offer bigger potential because other markets are saturated. Therefore, Dubai is still at the top of agenda of the new entrants," he said, adding that the emirate's geographical location, government policies, state-of-the-art infrastructure, increasing number of tourists and has high disposable income of the residents will be the driving factors for the emirate's retail industry going forward.

Amidst softening market, he advised existing retailers to rationalise costs because they opened networks everywhere during the heydays. For the new entrants, he suggested that they should thoroughly conduct the research and survey where they best fit in terms of location and rentals.

Written by Waheed Abbas

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