Build and they will come is not enough for Dubai's new malls

21 March 2017

Emirate plans to double the number of major shopping centres in the coming four years

Dubai is renowned for its “build and they will come” approach to development. That mantra will be tested to the limit over the coming five years as developers move forward with plans to build new retail space.

The focal point will be the Ras al-Khor and Nad al-Sheba area where new malls are planned by local developers Meydan and Emaar.

The most recent update is that the local developer Meydan Group has awarded Italy’s Salini Impregilo a $435m contract to build the Meydan One Mall that will include a ski slope. Construction is scheduled to begin this year and is planned to be finished within 23 months with the first phase of the mall expected to open in 2020.

Just a few kilometres away, Emaar is planning a major retail district at Dubai Creek Harbour, which the company has said will be the world’s largest shopping mall, and a little further away construction work has started on another shopping mall at its Dubai Hills development.

All three of these planned malls are a short drive away from Emaar’s existing Dubai Mall, which is already one of the world’s largest malls and it being expanded.

These projects, together with other large malls that are planned in other parts of Dubai such as Nakheel’s Deira Islands Mall, risk flooding the market with new supply from 2019 onwards at a time when the retail market is already showing signs of weakness.

For this year, US property consultant JLL says: “Given muted market activity and demand, the potential entry of more than 300,000 square metres of retail GLA [gross leaseable area] in 2017 poses a risk of over-supply to the market.”

After 2017 the prospects for acute oversupply are expected to heighten as the amount of new stock planned increases sharply.

Details on the actual scale of the new malls that will be delivered later have not been fully released, although Nakheel says Deira Islands Mall will have 371,000 square metres of leaseable space – similar to Dubai Mall, and the Dubai Hills mall will have about 150,000 square metres of leaseable area.

Sources close to the Dubai Creek Harbour retail district say it will have a total area of about 1.7 million square metres of space that will give it more leaseable area than Dubai Mall. For Meydan there are few details on area, but the developer has said the mall will have about 600 stores, which is about the same number as Dubai’s second largest mall, Mall of the Emirates.

These new malls will not only effectively double the number of major malls in the emirate over the coming four years, they will also be joined by significant expansions to existing properties such as Dubai Mall, Ibn Battuta and Mall of the Emirates.

Malls in Dubai have demonstrated over the past decade that with their various attractions they are adept at generating footfall, but for the new projects to be a success the retail outlets will have to perform strongly. This is becoming increasingly more difficult as consumers move to shopping online.

That means over the five years “build and they will come” alone will not be good enough for Dubai’s malls. People will also have to shop.

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