KHALEEJ TIMES, Tuesday, May 15, 2018 | Shaaban 29, 1439
Dubai a top choice for global retailers
Dubai maintained its
status as a global destination for shoppers as the emirate ranked the second top
target market for new retail entrants surpassing global retail hotspots such as
London, Tokyo, New York and Paris, shows a new research released on Monday.
According to global consultancy CBRE's report,
Dubai was the target of 59 new global brands followed by Taipei (52), London
(49), Tokyo (46), Toronto (40), Singapore (38), Bangkok (30) and Abu Dhabi (24).
Hong Kong topped the list with 86.
Among the countries, the UAE was ranked second
after Hong Kong for new entrants with 63 and 86, respectively. The other top
markets for new entrants were UK (54), Taiwan (52), Germany (51) and Japan (47).
Hamad Buamim, president and CEO, Dubai Chamber of
Commerce and Industry, said the report proves that Dubai continues to be an
attractive market for international retailers.
"One of the major advantages of having a presence
in Dubai is its excellent infrastructure, hence, it continues to attract brands
and consumers from other parts of the world," Buamim said.
Gaith Shocair, CEO of shopping malls at Majid Al
Futtaim Properties, said Dubai's status as the topglobal shopping destination
underscores the long-term potential of the home market.
Buamim said Dubai has right fundamentals in place.
"We have had challenges therefore we relaunched retail business group to work
together to voice their common issues. We are trying to keep Dubai competitive
by keeping international businesses here and also by growing local retailers,"
While addressing the opening speech at the launch
of the report, Buamim stated that since Dubai has been growing and attracting
international players and is reaching maturity level. Therefore, the margins
have also started to drop as competition increases.
"Five years ago, people were expecting
double-digit growth with double-digit margins. Because Dubai continued to
attract international retailers, market became competitive and margins reduced,"
"Dubai's retail sector continues to see
significant expansion of supply despite a general softening of market conditions
over the past 24 months, which has resulted in falling rent and rising vacancy,"
CBRE analysts said in the report.
Over the next 3 years, they said more than 1.5m
sqm of new retail space could be delivered to the Dubai market, adding roughly
50 per cent to the existing inventory. This amount to around 70 per cent of the
total future retail supply for the UAE over the same period.
Nick Maclean, managing director, CBRE Middle East
and Turkey, said Dubai remains the most attractive market in the region for
retailers, with many using the emirate as a "launch pad" for regional expansion.
"Advancements in retail technology and e-commerce
have, however, forced retailers to rethink their strategies. Several retailers
are changing their approach in the market with a focus on opening digital
platforms and increasing operational efficiencies," Maclean said.
Natasha Patel, director in CBRE's global research
team, said major malls are commanding huge premiums over the wide market average
while secondary centres are making significant rent reductions to attract new
tenants and to retain existing brands.
Occupancy rates of prime malls - such as Dubai
Mall, Mall of Emirates and Ibn Battuta Mall - are still running around 95 to 98
Patel said despite weaker consumer sentiments
caused by lower oil prices and the emergence of more challenging domestic market
conditions, Abu Dhabi's retail market attracted a host of new international
retailers in 2017. "Most these were F&B brands including Coya and La Petite
Maison, followed by mid-range fashion brands... Dalma Mall, with 150,000 sqm of
gross leasable area also welcomed a number of new global brands from Asia,
Europe and North America," she said.
Nadeem Khanzadah, a retail industry veteran in the
UAE, sees softening of the local retail industry as a temporary phase.
"I believe Dubai will tide over the slowdown as
Middle East and Dubai offer bigger potential because other markets are
saturated. Therefore, Dubai is still at the top of agenda of the new entrants,"
he said, adding that the emirate's geographical location, government policies,
state-of-the-art infrastructure, increasing number of tourists and has high
disposable income of the residents will be the driving factors for the emirate's
retail industry going forward.
Amidst softening market, he advised existing
retailers to rationalise costs because they opened networks everywhere during
the heydays. For the new entrants, he suggested that they should thoroughly
conduct the research and survey where they best fit in terms of location and