UAE retail year in review: expansion to the fore despite thin margins

Mall developers added more than 220,000 square metres of retail space in Dubai and the Northern Emirates in the final three months of this year.

With 4.7 million square metres of shopping centres in Dubai and Abu Dhabi alone, the UAE has one of the highest numbers of shops per capita in the world, according to a Knight Frank report last month.

Dubai’s original super prime mall – Mall of Emirates – added another 25,000 square metres of gross leasable area (GLA) in September.

One of the most-impressive facts about the Dh1 billion extension was that the construction of another floor was undertaken without shutting down a square foot of the operating GLA.

The extension includes 20 fashion brands, 12 restaurants and a revamped 24-screen VOX Cinema that includes a new concept, ThEATre by Gary Rhodes, that brings gold-class seats with Michelin-starred cuisine.

Its developer, the MAF group, had a busythird quarter, also opening City Centre Me’aisem, a community mall in a burgeoning outlying district of Dubai, creating another 23,850 square metres of shopping space.

Nakheel joined in the retail party, adding 1.4 million square feet of space in Dubai with the opening of Dragon Mart 2 last month. The Dh1bn extension almost doubled the size of Dragon Mart.

Nakheel also opened a much-needed mall, the 400,000 sq ft Golden Mile Galleria, on Palm Jumeirah in October.

Nakheel has 3.4 million sq ft of GLA currently in operation with more than 11.5 million sq ft of GLA in the pipeline, including 10 large new projects under development.

The Northern Emirates welcomed the new Fujairah Mall, opened on December 2, with a GLA of more than 35,000 square metres and operated by Aswaq Management and Services.

However, the exponential growth of mall space wasn’t backed by an exponential growth in sales.

The electronics chain, Plug Ins, a division of Al Futtaim, said that it managed to eke out annualised sales growth of 2 per cent this year, even as its annual survey showed that consumer spending on electronics fell by 16.5 per cent year on year in September. But it wasn’t just the thin margins of the electronics segment that were under pressure. Gulf Marketing Group’s (GMG) Sun & Sand Sports reported a 5 per cent year-on-year growth in like-for-like sales across its stores but its distribution partners reported falls of up to 10 per cent, it said.

The continued problems of the Russian economy saw its visitor numbers, a former stalwart of the UAE tourism sector, drop further this year, with passengers through Dubai airport down 36 per cent year on year in February.

Dubai Duty Free, the emirate’s retailing behemoth, expected sales to be flat this year compared to the previous year – with the fall in Russian visitors estimated to have cost it US$50 million in sales this year.

However, it was talk of Apple that dominated the fourth quarter. At the end of October, for only the second time in its history, it opened up two shops in the same country on the same day – in Dubai and Abu Dhabi – with thousands queuing for hours to be the first into the hallowed halls.

ascott@thenational.ae

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