Retail spaces in Dubai are recording an upturn in demand from investors chasing value picks. Will this interest hold? (Image used for illustrative purposes.) Image Credit: Ahmed Ramzan/ Gulf News

On one level, the UAE real estate market has been a tangle of paradoxes.

Demand for villas have been soaring even as prices fall across the board; office demand continues to fall along with that of apartments, even as transaction volumes rise. Interest rates have reached record lows and yet mortgage demand (or supply) growth has remained subdued.

Many of these trends have been following patterns observed in international markets where although stimulus measures have raised values of all asset markets, the behavioral response has been in reaction to the pandemic and the preferences associated with this phenomena.

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Piling into retail

Of course one such impulse has always been the opportunistic one, the ability to move against the tide in hopes of capturing bargain basement prices. Internationally, as well as in Dubai, there has been some demand for retail assets, even as the drumbeats of ecommerce signifying the death of traditional retail continue to roll.

For some retailers, it has been their first opportunity to become property owners of their businesses. For others, it has been a simple case of capitalizing on opportunities where assets have fallen below replacement value. And despite the prospects of tenants having evacuated, there is now the prospects of a “recalibration” as new businesses start to test the waters.

These transactions, for the most part, have been few and far between, and do not capture headline numbers in the way residential or commercial transactions do. However, it does suggest the beginnings of a shift in thinking as investors look to the most beaten up of assets and look past the current fallout.

No dearth

There is plenty of retail space available in Dubai, and even outside the mall space, there has been a constant churning of concepts as new ideas are tested. Combined with some inevitable relaxation of zoning restrictions, there still appears to be a fragmented market, where, outside of luxury retail space, new spigots of demand will be needed as technology continues to disrupt industries without discrimination.

This has fueled demand for all kinds of things technological, spurring asset values in the West to increasingly absurd levels. Closer to home, and beneath the surface, the intriguing patterns of demand for “specialty” real estate indicates a level of sophistry and opportunism that suggests the conventional wisdom of retail destruction is finally being met with skepticism - by investors and retailers alike.


From refurbishment to specialty retail, and from converting leases into assets, this is a trend that has begun. Even though many have framed the ecommerce revolution as some sort of referendum on traditional retail, the reality has been somewhat more prosaic.

Retailers have been following their customers into the suburbs and have been moving into apartment blocks that have retail access. Often, it’s the corner grocer shop, laundry or the shawarma place.

Increasingly, however, we have started to see experimental concepts being carried out as prices have reached levels where it becomes worthwhile to do so. From amateur art to specialty bookstores to flea markets and garage sales, everything seems to be experimented upon again.

In this sense, the traditional concept of SME retail (whether it is on the ground floor of apartment/office blocks), or even through rezoning, seems to be intact as it has for centuries, no matter the inroads that technology continues to make.

Obstacles are there

The overarching issue obviously remains the flow of credit and the amount of liquidity available in the sector as a whole. The better part of the year witnessed stimulus measures being enacted (both financial and regulatory) that has sought to counter the fall in asset values and the sense of loss that businesses have had to endure.

Even as the fallout of large-scale company closures like Arabtec continues to work their way throughout the economy, restricting credit flows, there is some semblance of stability in the offing. In the retail space, the impact has been the hardest, especially with the closure of numerous SME business enterprises. But just as the demand for villas has shown, there are price levels where opportunity becomes worthwhile enough.

Retail real estate transactional data suggests that confidence in this space, despite all the talk of the “ecommerce disruption” and falling rents, has started to revive.

- Sameer Lakhani is Managing Director at Global Capital Partners.