Dubai: Retailers needn’t worry about finding space in Dubai... if they can wait for three or four years. In the space of one week, Dubai made sure of that by adding 14.7 million square feet of fresh retail space through Mall of the World (8 million square feet) and the shopping destination on Nakheel’s Deira Islands (6.7 million square feet) and the design contract for which has just been awarded.
By doing so, Dubai has made it quite clear what the city thinks about the clamour over online retailing and that it is the future of retail. In Dubai’s vision of things, brick-and-mortar retailing will have as much permanence as in the past and will not lose out to the clicks. The two will find ways to accommodate each other rather than compete directly at the other’s cost.
Dubai is certainly adding a lot of bricks and mortars to back up that vision, where shopping is not confined to the instant gratification of buying a merchandise. Instead, shopping is being elevated to a full-blown experience where a visit to a mall fulfils the visitor’s other requirements, be it in leisure, entertainment or even contemplation (if the individual can block out the buzz around him.)
All of these pursuits add up to a quality of life that few cities can offer. and that is the statement of intent Dubai is putting out. Create enough attractions tied around a shopping platform, that destination will become a magnet for visitors. Even repeat visitors.
Gameplan
Some of that gameplan is already on show at the leading malls, be it through Ski Dubai or the Aquarium.
“Once complete, a large number of regional and international tourists will flock to the mall,” said Joe Tabet, chairman of Pragma Group and operator of the Cavalli clubs. “This will in turn drive growth of high-end hospitality and leisure related concepts.
“In 2013 alone, Dubai welcomed the opening of The Waldorf Astoria, The Conrad and the JW Marriot Marquis. In the near future, Pragma as well is contemplating to open up various lifestyle venues to tap into the booming hospitality market. We anticipate the investor sentiment in Dubai to significantly increase further to this announcement.”
According to Simon Townsend, business development manager at DTZ, “With regards to the leasing strategy for the new mega [retail] projects, it is likely that target anchor tenants have been identified. The internal designs will remain fluid until such anchor tenants clarify indicative space requirements.
“At that stage, the key units will be finalised and leasing strategy implemented to maximise value of these prime units. I would envisage that high level discussions will probably commence with the anchor tenants shortly with a view to seeing the appetite from both existing large occupiers as well as potentially new operators keen to grow their global retailing footprint.”
Global retailers will be all ears for what Dubai has to say. Retailers are willing to pay a uber-premium for a chance to be in one the choice locations. In fact, these days global brands, even those trying to get into the market, insist on such locations as a precondition in their contractual requirements with local partners. Somewhere else will just not do.
In fact, finding space is very much a live issue for retailers in Dubai. Waiting lists run into the hundreds for the leading malls, and it could be a year or more for many of these potential tenants to be accommodated.
“The retail sector remains one of the most vital streams for economic activity in the emirate and the industry is likely to witness significant growth in the lead up to Expo 2020,” said Nick Maclean, regional managing director at CBRE.
The pressure will only ratchet up in the near term. Over the last three years, Dubai has been right up there with London, New York or Paris as a destination where global retailers just had to be. In findings by CBRE, the consultancy, Dubai was just behind London in terms of having representation by international brands and their ranks keep getting added to.
This is why a Mall of the World or the one on Deira Islands can prove quite accommodating to such sustained demand. “These will help Dubai get the top position in “brand penetration” worldwide,” said Ajai Dayal, CEO of TriDayle, the retail advisory firm. “Today, we trail London by 4-5 percentage points; with the growth that Dubai is seeing happen and what it expects — Mall of the World will fill all the needs.”
All retailers need to have is show a bit of patience.
