State of Middle East Retail Real Estate
Offering a look at the thriving mall culture in the Middle East fuelled by diverse retail offerings, an exciting mix of retailtainment and a seamless visitor experience, this report examines the evolving face of regional shopping centres and a shift in tenant mix.
The GCC retail market has witnessed “unprecedented level of demand,” indicated CBRE’s 2024 Middle East real estate market outlook report.
Based on data from Oxford Economics the GCC retail market is expected to grow by more than 2% in 2024 to reach over AED900 billion ($246 billion) in retail sales by the year end, shared Anthony Spary, Head of Retail – CBRE MENA. The UAE is expected to lead the way in terms of annualised growth at close to 4.5%.
Demand outstripping supply
As a result, several key markets in the GCC – Dubai, for example, operating at 97% occupancy rate across assets – are facing a lack of quality retail space leading to skyrocketing rentals. From the days of speculating oversupply, it seems as if retail real estate has entered an era where demand is outstripping supply, especially in case of certain popular super-regional malls.
Data from international consultancy firm Nikoliers estimated that average rental rates on new leases have gone up 71% in popular malls such as Mall of the Emirates, Dubai Mall and Dubai Marina Mall. In the Kingdom of Saudi Arabia too, retail rents increased through the past year, indicated Deloitte’s 2024 KSA market review report, as the average regional and super-regional mall rents rose by 3%.
“We are facing challenges with undersupply, which is placing significant pressure on brands expansion and rollout plans across the region,” Spary observed. “Whilst this is likely to support rental performance, it will impact new occupier activity in the sector. More so, the trajectory for secondary and tertiary assets is yet to change meaningfully, and we are unlikely to see this change without capital expenditures and asset repositioning.”
Download the full report here.
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