Business | Property
Dubai retailers grab prime space despite high rents
Many overstretched tenants may disagree, but the highest rental rates in Dubai are not found in the residential sector, but in the glittering world of retail, latest research shows.
- By Suzanne Fenton, Staff Reporter
- Published: 00:22 July 31, 2008
Dubai: Many overstretched tenants may disagree, but the highest rental rates in Dubai are not found in the residential sector, but in the glittering world of retail, latest research shows.
Retail rental rates in Dubai have not changed significantly since the first quarter of 2008, with high-end retail locations like BurJuman and Mall of the Emirates fixing rents between Dh400 to Dh600 per square foot.
Average retail rental rates are fixed at Dh600 per square foot in Dubai and Dh400 in Abu Dhabi.
Data from Jones Lang LaSalle show that the average rent for convenience stores and neighbourhood centres is Dh200 to Dh25 per square foot.
For regional and super regional centres this goes up to Dh400 to Dh550 per square foot.
Despite high rental rates, occupancy still continues to be over 90 per cent as people are willing to pay heavily for a prized position in Dubai's glittering retail industry.
Soaring demand
Indeed, a recent report by Colliers International shows retail occupancy rates to be as high as 98 per cent or 100 per cent in 'destination' shopping malls.
And with many wealthy Emiratis and expatriates having the means to shop until they drop, the new supply of shopping malls can't come quickly enough. Retail has played a major role in an overall increase of 234 per cent in new sale registration activity in the second quarter of 2008, compared with the same period last year, according to Better Homes' quarterly commercial review.
The review shows total real estate transaction values have increased 204 per cent year on year from Dh6.8 billion in 2007 to Dh13.9 billion in 2008, shows figures from Dubai's Land Department.
The Better Homes report illustrates the current retail supply of gross leasable area (GLA) in Dubai stands at around 1.6 million square metres. The current demand for GLA in Dubai is only 118,000 square metres. The intended retail GLA supply by the end of 2008 is just over two million square metres.
Jones Lang LaSalle figures show Dubai has mall retail provisions averaging out at 10.1 square feet per person. This compares to 5.2 square feet per person in Abu Dhabi and 22.6 square feet per person in the US.
"The current supply of retail floorspace per person is still relatively low in the UAE compared to more mature markets.
"This is why the market is able to accommodate the large amounts of additional supply currently being developed," said Craig Plumb, head of research Mena region at Jones Lang LaSalle.
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