Dubai keeps the doors open for global brands

Dubai: For global retail, Dubai matters.

The city pulled in the second highest number of international brands (59) after Hong Kong (86) in 2017 and ahead of Taipei (52) and London (49), according to the latest rankings from CBRE, the property consultancy. In 2016, Dubai had attracted 38 new global brands into the marketplace.

And over the last two years, Dubai has been the top market in terms of international retailer presence, with a 62 per cent score. “We track 334 international brands and their global presence every year, and of these brands 62 per cent are now represented in Dubai through stand-alone stores,” said Natasha Patel, Head of Research at CBRE. “This also includes F&B operators.

Having a physical store network is critical to success. This is evident not only by the continued expansion of retailer store networks but also by the number of online-only brands that have expanded their networks to include physical stores as well.” - CBRE report

“We are still seeing significant interest among global names for a presence in Dubai, seeking out the most dominant locations.”

On the same score, Shanghai and London placed second and third, with 55.3 and 51.7 per cent, respectively, in terms of international retailer presence, while Abu Dhabi came in fourth with 51 per cent.

Coffee and restaurant brands continue to dominate the new entrants, adding up to a quarter globally. It is also a trend quite apparent at mall developments in the UAE. In Dubai, malls and shopping destinations had been tweaking their tenant mix to raise the presence of F&B operators over the last five years, and a strategy which is now yielding the desired results.

For the immediate future, mall owners can take a lot of heart from the sustained interest global brands have for Dubai. This despite the quite obvious dip in retail sector sales over the last two years.

According to CBRE, the next three years will alone add more than 1.5 million square metres of new retail space in Dubai, which is an additional 50 per cent to the existing stock. Nakheel is all set to unveil The Pointe, its F&B dominated strip on the Palm, while community-themed shopping centres are due to open at Al Barari and The Springs.

Dubai’s new retail space “amounts to roughly 70 per cent of the total future retail supply for the UAE over the same time period, and underlines the massive real estate market transformation that is occurring in the build up to Expo 2020,” the report adds.

And the new shopping and entertainment spaces are being created at a time when rents are coming under pressure and mall owners have had to make some adjustments to their lease terms. But despite all the short-term challenges, brick-and-mortar will still have a role to play … and a major one at that.

“Having a physical store network is critical to success,” the CBRE report adds. “This is evident not only by the continued expansion of retailer store networks but also by the number of online-only brands that have expanded their networks to include physical stores as well.

“Nonetheless, retailer caution has led to a slowdown in physical store expansion by new entrants, falling by 2.9 per cent like-for-like from 2016 activity. Retailers do not need as big of a store portfolio as they once did to access their consumer base."