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A mall story
The outlook for malls in the UAE is good, according to a new analysis report. But with so much new space coming online, can that be right? Kipp takes a look.
August 18, 2010 1:34 by Samuel Potter
The question is, with “the biggest mall under construction in the region” (Mall of Arabia) set to open this year, and more in the pipeline, is this optimism justified? As Trends Magazine reported earlier this year (in a story featured on Kipp) the picture on the shop floor is not necessarily as rosy as this analysis would have you believe, with retailers across Dubai struggling to earn enough to pay the rent.
“Some people will be affected, some people will do more business, some will do less profits, so of course everybody is asking for a rent reduction. It’s not just in Dubai, it’s everywhere,” the president of the Middle East Council on Shopping Centers, Maher Al Shaer, said at the time.
And the situation is set to get more difficult with the arrival of the new mall spaces. According to the chief executive of Aswaq Management Services in Abu Dhabi, Jean-Herve Bouyer, stabilized urban markets have an average gross leasable area (the measure of space in a retail property that can be rented to sell goods) of 14 square feet per capita. If all of the Dubai developments scheduled to open in 2010 do so, the city will have 24.7 square feet of leasable area per capita. The most mature mall market – and hence considered the one demonstrating the maximum limit – is the US, which works at 21.7.
To sustain this space increase, average consumer spending in Dubai needs to be $7,100 per year, says Bouyer. At its peak in 2008, it was $3,200. Dubai Chamber’s determined optimism is admirable, but may not prove accurate.
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