With reports of international trade beginning to rebound as the world shakes off its isolationist tendency following the financial downturn of half-a-decade ago, reports that shopping in the Middle East is about to enter a new expansive phase is another indicator of good times ahead.
There’s no country better equipped to lead the nascent recovery than the United Arab Emirates (UAE), an oil-rich Persian Gulf state with a dynamic economy and growing political clout across the region. Dubai – both the city and the emirate of the same name which surrounds it – is leading the charge.
According to a recent report by the Oxford Business Group (OBG), a global publishing, research and consultancy firm which publishes economic intelligence on the markets of the Middle East, Africa, Asia and Latin America, rising demand and a recovering economy are driving growth in Dubai’s retail sector. A sharp increase in new mall space suggests it is beginning to shake off the doldrums of the global economic crisis of 2009.
Dubai has developed into the chief retail centre of the Middle East over the last decade, with the emirate home to one of the largest malls in the world and growing in stature year-on-year as a prime shopping destination amongst well-heeled tourists. However, even here it has been slow-going, with very little increase in retail space during the past three years.
But all of that is about to change, predicts the OBG, as the retail sector turns its back on shop closures and the scaling back of operations. Now, with Dubai’s economy rebounding, projects previously put on hold have been reactivated and new developments are being put into the pipeline.
So let the good times roll. By all accounts, shop until you drop is about to jump to yet another level and, of course, when Dubai leads the way then others are sure to follow. The OBG cites as evidence a report by property consultancy Jones Lang LaSalle (JLL) which says some 371,000 sq metres of new retail space is set to be rolled out over the next two years.
The flow through the development pipeline is expected to become stronger throughout the second half of the decade, as new projects are completed and some existing retail spaces expand to maintain their competitive edge.
Recent concerns over Dubai’s retail market becoming overstocked were dismissed by Iyad Malas, the CEO of developer Majid Al Futtaim Holding. He told the OBG, “The market still hasn’t reached a point of saturation, which is evidenced by the healthy and natural inflow of brands to the market and shopping centres.”
Dubai holds certain advantages for retailers, with a young population, solid household consumption levels and a rapidly expanding tourism industry. The emirate is also seen by many overseas retailers as an indicator of the sector’s well-being in the broader region.
Mat Green, the head of research for leading commercial real estate advisor CBRE in the UAE, said, “Retailers continue to expand into this region, often using Dubai as their launch platform into other markets such as Riyadh, Jeddah and Doha. According to CBRE research, 25 new retailers opened stores in Dubai last year.”
This is good news for mall developers, concludes the OBG, although with a number of projects set to come onto the market in the near future, competition to win the attention of retailers could be fierce. Read the full OBG report here.