Dubai super malls, attractions seen to boost footfall

By Issac John  www.khaleejtimes.com

DUBAI — Annual footfall in Dubai’s super malls is expected to rise in 2010, owing to tourist attractions and entertainment anchors within malls, leading real estate consultancy Jones Lang Lasalle said in a report.

“Despite the slow growth projected in consumer spending, annual footfall in major super regional malls such as Dubai Mall is expected to rise in 2010,” Jones Lang Lasalle (JLL) report said.  More enlightened centre managers are proactively engaging with tenants to offer more attractive and flexible terms, the report added.

Super regional and regional malls currently account for 75 per cent of total mall-based retail space, it said.

Average retail vacancies across regional malls had increased to between 8-10 per cent, the report noted.

It added that expansion plans by retailers were either being “revised downwards or cancelled altogether. Dubai has seen a rapid growth in retail supply in recent years, with gross leasable area per capita growing from 10.5 square feet in 2006 to 14 square feet in 2010. Total retail supply as of second quarter this year in Dubai was around 26 million square feet.

JLL said no new major mall supply was expected to be released until 2013 when the first phase of the Mall of Arabia in Dubailand is scheduled to open.

In 2009, average retail rents in Dubai fell nearly 40 per cent with vacancies across major malls increasing, it said. Average estimated rental values declined by about 39 per cent to Dh209 per sq ft since the second quarter of 2009.

A report by the Dubai Chamber of Commerce has made a bullish forecast that retail spending in Dubai would increase by around four  per cent in 2010 and by more than eight per cent in 2011. In 2009, retailers and mall owners reported a typical decline of at least 20 per cent in retail sales, aaccording to the JLL. For the remainder of 2010 and beyond, Dubai’s retail market is likely to shift in line with the mainstream global retail market through an increased emphasis on competitive pricing, creative marketing programmes, convenience shopping and value for money, it said.

In an earlier report, JLL argued Dubai’s retail sector was undergoing a period of transition. With new supply entering the market, declining sales, lower footfalls and reduced tourist numbers in 2009, the pressure on the retail industry means it has to look long and hard at how it can evolve out of the crisis.

The pressure on the retail industry due to new supply entering the market, declining sales, lower footfalls and reduced tourist numbers in 2009 is no longer exits, it noted.

“The Dubai market has experienced a period where retail supply has been growing ahead of demand generators and this has resulted in a significant increase in the retail space per person. The next few years are likely to see a reversal of this situation, with retail supply growing less quickly than population and visitor arrivals,” JLL said.

The report argued that the slow growth in retail supply would result in the market returning to a position that can support major additional projects in due course. “The timing of these projects will be dependent upon that of the residential, employment and tourist generators in the surrounding area.”

— issacjohn@khaleejtimes.com