Rents in Dubai’s retail sector grew by an average of 15 percent in the third quarter of this year, as a lack of new supply and high demand from shoppers meant it remained a landlords’ market at the emirate’s popular malls.
There were no new completions of retail space in the second quarter of the year, according to consultants JLL.
“Dubai’s retail market demonstrated strong momentum in Q3 2024, driven by healthy tourism levels, population growth and the general strength of the consumer within Dubai,” Faraz Ahmed, research director for the Middle East and North Africa at JLL, told AGBI.
Strong leasing activity has pushed average vacancy rates down to 9 percent, and this has resulted in rental rates rising by 15 percent year on year, he said.
According to data provider ValuStrat, there is 185,000 square metres of leasable space under construction, and the majority of this is in the large-scale malls.
Union Coop is building a new community mall in Al Khawaneej Second, which is set to open in the second quarter of 2025, but ValuStrat said 70 percent of the space has already been leased to tenants.
CRC Real Estate focuses on the commercial sector and is an affiliate of Dubai real estate conglomerate Betterhomes. It reported 319 retail sales in the third quarter of this year, an increase of 33 percent year on year.
However, the value of the deals was even higher, reaching AED7389 million ($201 million) during the quarter, an increase of 87 percent year on year.
The lack of available supply has meant that off-plan sales have dominated, accounting for 54 percent of the value of sales, as retailers look to bank space in the future. As a result, CRC said new stock that does become available is “commanding premium rents”.
CRC said the five most popular locations for retail transactions in Q3 were International City, Mohammed Bin Rashid City, Dubai Marina, Jumeirah Village Circle and Arjan.
For a detailed perspective on the property market, visit: Dubai - Real Estate Review Q3 2024
