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High End Retail Sector in the UAE is on the Road to Recovery

UAE : 16 December 2010

Global commercial real estate leader CB Richard Ellis (or CBRE) forecasts that high-end retailers in the UAE are on the road to recovery despite being hard hit in the recent crisis.

Even though the past is littered with issues, news and data from Dubai is positive and Abu Dhabi is the focus of developments and retail firms throughout the UAE, according to the CBRE report.

Certain areas in the UAE felt the recent downturn less than others, such as northern emirates Sharjah, Ras Al Khaimah and Ajman.  These locations are not as dependent on the tourism industry.

Retail firms that have become established in Dubai are now expanding their horizons to include more of the UAE, given that Dubai is full of shopping centers and there are no plans for further developments over the short term.  Senior retail analyst at CBRE Middle East Matthew Jay spoke to Trade Arabia about the plan these retailers have to use a Dubai base as an expansion point to reach a variety of markets in the area.

Even though interest is stirring around Abu Dhabi, Dubai is still the hot spot.  In November 2008 when the opening of the Dubai Mall occurred, the shopping centre had empty spots.  Since the springtime commercial leasing has heated up and numerous new retailers have opened their doors in the Mall.  The opening of this massive shopping centre, along with some other large-scale operations, has had an effect on the foot traffic in older and smaller shopping centers.

The Mall of Emirates witnessed the opening of a major luxury center within the grounds which has the pressure rising even further.  A list of well known and high-end fashion names have been drawn to the Fashion Dome, including Cartier, Christian Louboutin, Diane von Furstenburg, Galliano, Paul Smith, See by Chloe and Versace, as well as a large D&G boutique.  Christian Dior, Louis Vuitton and Gucci were already established in the Mall, but have expanded their presence into the Fashion Dome.

Because of these developments other well known and established centers like Burjaman and Deira City Centre have been scrambling to reassess their position in the market.  Jay noted that adjustments are probable at these malls in 2011 as they look for a new niche in the altered retail market.

Shopping centre saturation is evident in Dubai with all of the new developments for the upcoming five year period focusing on Abu Dhabi.

The Dalma Mall opened this past October with 200,000 square metres of space.  CBRE estimates that around 1 million square metres of retail space is set to become available within the next 36 months.  Set for opening are Arzanah Project, Bawabt Al Sharq Mall, Deerfields Town Square, Emporium, Mazyad Mall, Mushrif Mall, Reem Mall, Yas Island and 9712 Mall.

The Fujairah City Centre is a 30,000 square metre facility within the emirate of Fujairah that is supposed to be opening next year, along with an extension to the Al Ain Mall.

Because of the high levels of heat in this region air conditioned shopping malls dominate the retail sector.  Retailer parks are not suitable for the region and big box formats have not yet caught on.  IKEA is set to develop a big box area next year in Abu Dhabi at Yas Island according to the CBRE report.

Carrefour, a French grocery chain, is also aggressively growing throughout the UAE operating under Majid Al Futtaim (or MAF) as a local partner.  The firm has been focusing on hypermarkets as well as more compact Carrefour Express outlets in conjunction with plans for neighbourhoods.

Many new retailers have entered the UAE market, mainly drawn in through MH AlShaya, the biggest franchise firm in mid-range fashion.  The Mirdiff City Centre by MAF is the new base for retailers like American Eagle, PF Changs, Pinkberry, Pottery Barn and Pottery Barn Kids who opened UAE locations in 2010.

Working with the Al Tayer Group franchisee firm, Crate & Barrel has opened its first location outside of the US with a 2,500 square metre store within the Mall of Emirates.  The CBRE report also noted that Matalan has opened a value fashion store in Dubai as well as Abu Dhabi.

Paul Holdsworth, Staff Writer, Gulf Jobs Market News
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