In a city that already has more than 60 million square feet of leasable retail space, one of the highest per capita in the shopping-crazy Gulf, it is perhaps surprising to see more malls being built or added to the pipeline.
Yet that is exactly what is happening in Dubai, where this week Sobha Realty said it has started construction on a new 339,000sq ft mall at its Sobha Hartland community at a price of AED210 million ($57.22 million).
This follows the much glitzier announcement by Emaar in June that it would spend 1.5 billion dirham ($408 million) to add 204 shops, restaurants and cafes to the already massive 12 million sq ft Dubai Mall – which in 2023 became the most visited place in the world with 105 million customers, according to Emirati news agency Wam.
Experts say these two classes of retail centres, the smaller community mall and the “headline grabbing” mega-mall, exemplify precisely what’s driving Dubai’s success and growth in this industry.
“Dubai’s world-class mega-malls are very much part of Dubai’s tourism offering and are extremely popular with both tourists and residents all year round,” says Andrew Elliott, director of commercial agency at Chestertons Mena.
“Community malls offer on-the-doorstep shopping, dining and entertainment for families and individuals,” he says.
“With new residential developments on the way and existing developments continuing to expand, there is still plenty of opportunity for local community malls.”
Also slated for delivery this year are another 1.8 million sq ft of leasable area, according to research company Nikoliers, including across expected malls such as the Al Khail Avenue mall and the Dubai Expo mall, though just how much progress is there on those is unclear.
UAE malls and shopping centres
The new Sobha Realty mall will be relatively contained in size, with about 35 stores, restaurants, gyms and other amenities.
It is designed to cater to the needs of growing residential communities east of Dubai Design District, which currently have little retail access outside of Dubai Mall, more than 10km of busy highways away.
Providing residents with a range of local conveniences that community malls typically offer – from grocery stores, pharmacies and medical clinics to small shops and restaurants – also fits the Dubai authorities’ newly announced embrace of the “20-minute city”.
“Take Dubai Hills Mall, for instance. The venue, which is quite large and high-end, has become popular among residents along Umm Suqeim Street, such as those from communities like Dubai Hills, Arabian Ranches and Moudon,” says Imran Sheikh, a partner at BlackOak Real Estate in Dubai.
“The retail space is filling up fast, and the mall is always packed. Contrary to expectations, it seems like there has been no cannibalisation of shoppers from Dubai Mall or Mall of the Emirates,” he says.
“So, Sobha building a new mall doesn't surprise me. Malls closer to communities with a large radial reach will succeed.”
Haider Tuaima, director of real estate research for ValuStrat, has been in Dubai for almost 30 years and remembers when the city proudly counted seven malls in the mid-1990s.
It’s been a long journey to the 135 in operation today, but Tuaima believes there is definitely space for more due to population growth and the hot climate.
Tuaima says that a mall’s location, size and ability to target the right customer base will obviously have an impact on its success, with individual centres’ performances varying across the city and time.
But occupancy is high across the board, Tuaima says. ValuStrat data shows top-rated malls by Emaar Properties and Majid Al Futtaim securing 97 and 96 percent occupancy in 2023, respectively.
According to CBRE, average retail rents in Dubai rose 10.5 percent the first three months of this year over the same period in 2023 amid the “supply-and-demand imbalance”.
And then there’s the climate.
“For Dubai, and the Gulf in general, being under air conditioning for shopping, dining, if you are a family with kids and there is some sort of a place for them to play, is really crucial, because you're looking at four to six months of hot weather,” says Tuaima.
For a detailed perspective on the property market, visit: Dubai - VPI Residential Capital Values - June 2024
