Soaring rents in Dubai’s most popular malls are in danger of stifling the emirate’s retailers, Dubai-based property analysts have said.
Smaller firms and entrepreneurs in particular risk being marginalised by high prices, which could prevent them from debuting in the market or increasing their number of branches, experts have said. “Dubai remains one of the highest costs to retail within the GCC and indeed the regional market,” said Stuart Gissing, a UAE retail property analyst at Colliers.
“Many malls and developers are still reluctant to take on a new product that is not perceived as main stream and widely recognised. This situation will suppress smaller brands and more entrepreneurial outlets from flourishing.“Dubai needs to recognise these smaller brands, as collectively, they will contribute to a wider audience.”Dubai, which has spent billions of dollars establishing itself as a prime shopping destination, is home to some of the world’s largest and most iconic shopping malls.
Boosted by a high disposable income among locals and a strong tourism industry, the emirate’s retail sector has continued to grow.According to a study by accountancy firm Deloitte, retail sales in 2010 jumped 13.2 percent in the MENA region, making it the only area in the world to post double digit growth.Rents in Dubai’s super malls have accordingly bucked an emirate-wide decline in commercial and residential rates, and in some cases, continued to rise.Analysts say the trend, which is showing no signs of abating, could deter even mid-sized retailers from expanding in the region.
“Dubai has to be careful,” said Michael Attwell, a retail analyst from international consultancy Cushman and Wakefield.“If landlords try to overinflate the rents above market value, then it will make it difficult for retailers to trade successfully, and landlords will suffer. It will get to the point where people look at other areas like Abu Dhabi and Qatar.”