Dubai may scale back or delay its planned mega mall plans as anecdotal evidence suggests that the emirate’s retail market is currently under pressure, a new report has said.
JLL’s Q1 2017 Dubai Real Estate Market Overview report said the first quarter of 2017 was a quiet one for the retail market, with Q2 2015 being the last time it witnessed additions.
The total retail supply currently stands at 3.4 million square metres of gross leasable area (GLA) with future supply expected to grow by more than 20 percent by 2020, which is slightly ahead of the growth over the past 3 years (17 percent).
There are also a number of ‘super regional’ malls such as Deira Mall and Meydan One Mall currently scheduled to complete in 2020.
“As the retail market slows, some of these major projects may however be scaled back or delayed,” JLL said.
It added that despite reports on a retail slowdown in Dubai, rents have remained largely unchanged.
“From discussions with industry players, we understand that most renewals and new leases did not achieve any increase in retail rents, although developers were asking for these. This suggests that the market is currently in favour of tenants,” JLL noted.
It added that the number of units able to achieve the same level of rentals has also declined over the past 6 months, further disguising the effective softening in rentals.
The slowdown in the rate of economic growth and the strength of the US dollar are the major drivers behind weakening retail sentiment, the report said.
“We believe that the long-term picture is more positive. Dubai currently stands at the forefront of entertainment offerings by global comparisons, from shopping malls, to entertainment parks, and cultural as well as theatrical amusements,” it added.
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