Dubai: The Dubai Mall is to add one million square feet of new retail and hospitality space to its already staggering 12 million square feet as a means to cement its hold as the most-visited shopping destination in the world. The developer, Emaar Properties, has not given a timeframe as to when the expansion will be complete, though industry observers suggest four to five years would be a reasonable guess.
Last year, the mall hosted more than 54 million visitors and has had a good start to this year as well. With yesterday's expansion announcement, Emaar's strategy would be to keep the momentum going well into the mid- to long-term.
Details as to where and how the expansion will shape up have not been revealed. According to David Macadam, the Mena head of retail at the real estate consultancy Jones Lang LaSalle, "Given the forecasts being made for tourism numbers in the next few years, it probably works in Emaar's favour to go ahead with the expansion now. The kind of traffic the mall is attracting on peak trading days, the potential for an expansion is already there.
Top of spectrum
"What the market needs to know how the expansion will be linked to the existing property, the road networks and additional infrastructure that will be required and other details."
Emaar's team has been working on the expansion plan for 12 months. The Dubai Mall now has 3.77 million square feet of gross leasable space.
Lease rates at The Dubai Mall currently average Dh450 to Dh500, according to market sources, and easily at the top end of the market spectrum. With the new space and the additional clout the destination will build up in the next three to five years, the developer could conceivably ask for a higher premium from prospective tenants, and what's more, get it.
Milestone
"I think the new space will fly as soon as it's made available on the market," said Ajai Dayal, a retail consultant. "As to whether there will be a premium over the current levels will depend a lot on the state of the market at the time. There's still a lot of time left for that to happen."
For Emaar's future revenue generation, the expansion marks a key milestone. Over the last two years, the cash generation from its retail and hospitality components have come to assume a significant proportion of its gross revenues. In the absence of a major turnaround in the residential space, this will be the state of affairs for the foreseeable future.
The additional space will include new hotel rooms as well as entertainment and lifestyle choices. Currently, the mall has more than 1,200 stores and 160 F&B outlets.
