Pushing retail ahead

The Abu Dhabi retail sector looks all set to emerge as an important peg on the world shopping map. A substantial amount of new supply is expected to flood the market with positivity in 2012 and beyond. “Abu Dhabi has been kind of undersupplied in the past. There is new retail supply coming into the market and one can see that it is a good quality of supply,” says Craig Plumb, Head of Research, Mena at Jones Lang LaSalle. By the end of 2013, the total retail gross leasable area (GLA) in Abu Dhabi could reach 2.3 million sqm, which is a 38 per cent increase from the current stock, according to the real estate consultancy’s last report, Abu Dhabi Office and Retail overview Q4 2011, he adds.

The report also states that while there have been major delays in the scheduled openings in retail centres, a possible additional 260,000sqm of retail GLA could enter the market before the end of 2012. The three major malls scheduled for delivery in the coming year are Paragon Mall on Reem Island, Capital Mall in Mohammad Bin Zayed City and Deerfields Town Square in Bahia. Other retail projects such as Boutik, Sun and Sky Tower on Reem Island, the retail podium at Etihad Towers, the mall at Nation Towers and The Galleria on Sowwah Square are also expected to enter the market soon.

“The new supply in the market will mean a reduction in the number of people who were travelling to Dubai to spend. It also means that retailing will capture more of the spending in Abu Dhabi,” says Plumb. Retail spend also benefits from other drivers. “When bonuses were paid to government sector staff a few months ago, it created a positive impact on the retail market. It got a boost and picked up in the first quarter of this year. ”
Current industry players are upbeat about retail and spending in Abu Dhabi. “Overall, 2011 was the most successful year for Abu Dhabi Motors,” says Arno Husselmann, General Manager of Abu Dhabi Motors. “We sold a total of 4,436 BMW cars, which was a 23 per cent increase from the previous year. MINI also experienced a successful year. Despite operating in a market that favours large cars, 2011 sales increased by 63 per cent, with a total of 196 cars sold.”

Abu Dhabi Motors became the top-selling importer among all premium brands in the Middle East, adds Husselmann. “We also had a very successful start this year.” Between January and February-end this year, 1,046 BMWs and 46 MINI cars were sold, representing a 46 per cent increase for BMW, a 100 per cent increase for MINI and a 15.4 per cent increase for Rolls-Royce compared to the same period in 2011, he says. Sales of the Rolls-Royce Phantom increased by 180 per cent. Abu Dhabi Motors also secured the highest sales growth for the Phantom Family out of the Rolls-Royce dealer network worldwide, and the highest-selling Bespoke Ghost Dealer in the world. “We dominated the Middle East sales with Rolls-Royce and outsold our nearest competitor by 345 per cent,” says Husselmann.

Trends in the Abu Dhabi automotive retail market are different from other automotive markets, says Husselmann, as in most other countries smaller models and lower-engine variants are the biggest sellers. The volume decreases as one moves up the sales pyramid.

“That pyramid is inverted here. Our larger models are our volume sellers. We are optimistic for 2012 as we have a number of new and exciting launches,” says Husselmann. He sees no hindrance to spend. “We expect our top models to continue dominating market share, enabling us to maintain our segment share of more than 50 per cent, which is unprecedented in the luxury segment of the automotive industry where all brands have representation.”

The positive sentiment is echoed by Line Investments and Property (LIP), a division of the Emke Group. LIP develops and manages seven prominent malls in Abu Dhabi and Al Ain, namely Khalidiyah Mall, Al Wahda Mall, Madinat Zayed Shopping Centre and Gold Centre, Mazyad Mall, Al Raha Mall, Al Foah Mall and Mushrif Mall.

“We feel that the market is showing great maturity and stability. In the Abu Dhabi market, we have noticed enhanced tenant interest,” says Yusuffali M.A., Managing Director of the Emke Group. “The rentals are showing positive signs, with many malls reporting an appreciation of around 30 per cent. On a new project such as the Al Wahda Mall extension, we have already leased out 85 per cent of the space within six months, which is a very good sign. Many of these brands are either first timers in Abu Dhabi or even the UAE.”

The coming year looks promising. “Going forward, we see scope for quality retailing with greater emphasis on leisure and convenience. Last year, we recorded a footfall of around 36 million and we expect that figure to go up to around 45 million this year. We believe that the retail scenario in Abu Dhabi will be energised with some of the large-scale projects being activated, including the Al Wahda Extension, which would eventually make the Al Wahda retail development the largest shopping mall in Abu Dhabi.” The group also has other expansion plans on the anvil, which include RAK Mall, Al Khor in Qatar, Galleria Mall in Fujairah and Lulu Mall in Kochi, India.