When the annual Dubai Shopping Festival was cancelled in January this year due to the death of Sheikh Maktoum bin Rashid al-Maktoum, local retailers took a hit. A core consumer group ? tourists ? stayed away from the emirate, hurting the hospitality and retail sectors that depend on a seasonal influx of spenders. But sales were not down for long. Consumer appetite in the UAE remains rapacious.

British holidaymakers wandering through any of Dubai?s 32 malls and shopping centres can browse in familiar high street stores such as Marks & Spencer, Debenhams and Top Shop, as well as European brands Mango and Zara, or push a trolley down the aisles of French supermarket giant Carrefour. Afterwards they can battle through the crowds at Ikea, before sitting down for a coffee at Costa or dinner at Pizza Express. International brands dominate the sector, which is heavily dependent on foreign visitors. ?It?s quite frightening; it?s extensive,? says one market researcher of tourists? contribution to sales.

A third of the more than 3 million visitors who flocked to the Dubai Shopping Festival in 2005 were from abroad. These included tourists from other GCC and Arab countries, Europeans, Americans and Russians. Visitors parted with more than AED 6,700 million ($1,824 million) during the month-long spending spree, encouraged by discount promotions and entertainment events. The festival?s summer counterpart, Dubai Summer Surprises ? due to start this year at the end of June, aims to boost sales in what used to be a lean retail period. The proliferation of air-conditioned malls with leisure facilities, children?s entertainment, food halls and abundant parking has changed all that. Shopping is now a year-round activity as fewer people leave the Gulf for cooler climes.

The mall has developed as a community hub. Mall-based footfall totalled an estimated 79 million in Dubai in 2005, accounting for half of shopping centre visits in the UAE that year. The figure does not include trips to markets or stand-alone offerings. The latest entrant to open its doors is Mall of the Emirates, which offers boutique, value and mainstream outlets, as well as food and beverage units, a hypermarket, a cinema and play areas for children. It even has an indoor ski-slope with real snow. The mall?s Kempinski Hotel is due to open in April.

Residents of the federation have the money to spend as they while away a day at the mall. Of all nationalities residing in the UAE in 2005, Emiratis and Western expatriates have the most cash to spend, with estimated annual disposable incomes of $19,910 and $17,073 respectively. In total, the estimated retail potential, which is the difference between what consumers could spend and what they do, was estimated to be $9,511 million that year, with south Asians accounting for 38 per cent.

The real estate boom in the UAE is laying the foundations for solid growth in domestic consumer spending. When it is fully completed in about 10 years, Al-Futtaim Group?s Dubai Festival City (DFC) will offer 3 million square feet of retail space, a third of which will be dedicated to food and beverage offerings, surrounded by four residential neighbourhoods and five hotels. DFC is typical in that it will include a key convenience offering to its thousands of residents in the form of a huge HyperPanda supermarket set to open in May this year, the first outside Saudi Arabia.

?A city is a nice word to describe a mixed-use development,? says James McCallum, group director of retail at Al-Futtaim. ?Retail comes with whatever economic driver there is. For instance, Dubai Sports City will need supermarkets and all sorts of services.? With the steady stream of expatriates settling in the federation in mind, Al-Futtaim is targeting its retail offering at the homeware and gardens market. ?There?s definitely room in the home sector for a wider offer and that?s not just defined by Dubai. It?s also the case in Abu Dhabi, Qatar and Egypt,? says McCallum. The group first partnered Ikea in 1991 and opened a 25,400-square-metre store in DFC in November. The group is considering taking the brand to Qatar. Al-Futtaim has also had to retrain its staff to cater to an increasingly permanent customer base. ?We?ve had to convince our staff that every customer is someone who?ll come back and not a tourist,? says McCallum.

Despite the string of malls in development, including Mall of Arabia and Dubai Mall ? both vying to be the biggest in world, demand for retail footage is still pressing and space is rented at a premium. At an estimated 1.3 million square metres of gross leasable area (GLA) in 2005, Dubai had the most retail space of all the emirates and double that of Abu Dhabi. Expansion in retail GLA will continue apace in Dubai in the next few years after the other emirates are saturated with malls. Most available space in Dubai is leased, despite rents being the highest at AED 2,917 ($794) a square metre a year, above the UAE average of AED 2,166 ($589).

?There?s an equal demand for community-based shopping and strip malls. [Shopping] cannot all be in very expensive marble halls. I?d be most surprised if [retail space] didn?t separate into good, better and best, hopefully reflected in rents,? says McCal