Dubai: In five years, Abu Dhabi's retail space is expected to grow at a scale where it will have equal billing with Dubai's, according to a new report issued by consultants Cushman and Wakefield. But it does require that all of the retail-related projects in the pipeline will actually make it past the finish line.
If all of that happens, by 2015, Abu Dhabi's gross leasable area (GLA) will be equivalent to 1,690 square metres per 1,000 residents, while Dubai's GLA is projected at 1,261 square metres per 1,000 residents.
Currently, this key retail benchmark is estimated at 936 square metres for Abu Dhabi and 1,385 square metres for Dubai. (The decline in this benchmark for Dubai by 2015 indicates the anticipated population growth and uncertainty in the supply pipeline).
The Dubai figure already surpasses the comparable benchmark for the United States — estimated at 1,028 square metres per 1,000 inhabitants — and that of the 27-member EU community, where it is 231 square metres.
But the 2015 forecasts for Dubai and Abu Dhabi are also an indicator that the UAE's retail space is inching closer to saturation point, the report added. With that comes the need for mall owners to play a different sort of game.
"Owners and managers of shopping malls will have to consider implementing active management strategies to re-align their properties to retain value," the report said.
"Some under-performing shopping centres may be redeveloped or even in some cases converted to other uses — as has been witnessed in the United States and European markets," the report added.
"Smaller and older malls will need to consider repositioning themselves to appeal to specific market segments in order to compete with new destination malls."
Will local mall owners consider taking such a step, given that for many it would seem drastic and represent a scaling down of their prestige as developers?
"They may not willing do so but you would be surprised to know some of the local mall owners are already thinking along such lines," said a Dubai-based retail consultant.
"It's better than to let their properties slip into decrepitude."
Retailers may already be forcing mall owners' hands. In recent months, retailers have been getting finicky over the locations they prefer to be.
In such cases, they have decided to forego the strategy of being represented at all possible locations and have instead chosen a select handful.
"Between now and until such time retail sales once again record healthy numbers, shop owners will prefer a ‘less is more' approach," the consultant added. "Mall owners better pay heed to this trend." Apart from the destination malls, there will still be other categories which could remain viable.
"Neighbourhood malls targeting local communities and providing essential services are expected to dominate their sectors and to perform well," said the report. "The development of community-led retail establishments or smaller community malls could offer a window of opportunity for the retail sector, particularly in markets such as Dubai. The nature of the traditional shopping experience in Arab culture, implies that a mall that doubles as a neighbourhood centre stands a better chance of cornering loyal clientele."
"There is unlikely to be sufficient demand for another mall in Dubai in the immediate short term, implying the ‘end of an era for rapid new supply' of wide-scale shopping space."
The report further calls for stricter licensing for new mall-related projects "to ensure that supply is aligned with demand."
Then again, it's not as if Dubai will be living on past glories where the retail sector is concerned.
"Despite the likely curtailment of the development of large-scale malls in the city, Dubai will continue to be a hub for the region's retail brands, especially for those at the luxury end of the market," it said.
The new mall additions in Abu Dhabi will come up on the many island destinations - Al Reem, Yas and Saadiyat - the emirate is creating.
"The Yas Mall is currently under construction with scheduled opening delayed until at least 2012," said the Cushman and Wakefield report.
The development will have a gross leasable area of 296,000 square metres set over three floors and featuring 700 stores. Anchor stores will include IKEA and Geant.
Niche offerings are also on the way. The Sun and Sky Towers on Reem Island will have a boutique mall of 8,040 square metres. It is on the platform link between the two high-rises and scheduled for opening next year.