UAE’s retail real estate continues to build momentum
The UAE continued to witness a positive trajectory across retail and hospitality sectors in the third quarter of 2022, indicates JLL.
While the third quarter saw no new retail projects completed in either Dubai or Abu Dhabi, the sector’s Q4 activity looks set to welcome around 154,000 sqm (approximately 1.7 million sqft) of new retail space in Dubai and 197,000 sqm (approximately 2.1 million sqft) in the capital.
With ample supply available for retailers to choose from potential tenants are being more strategic in selecting their locations for new outlets. A moderate increase in retail rents (3% in Dubai and 5% in Abu Dhabi) reflects a sector benefitting from improving levels of consumer confidence.
While the easing in restrictions is helping footfall to recover, mall owners are recognising the importance of differentiating their offerings in a landscape where there is ample supply. In view of greater competition, malls are introducing more experiential retail concepts and are seeking to have a greater variety of outlets for visitors to their properties.
JLL anticipates more developers and landlords looking to bring in homegrown concepts – particularly in the F&B segment – as they have the appeal of offering experiences tailored to local needs, while also being relatively adaptable.
On the other hand, hotels are likely to continue to perform well in the coming months benefitting from upcoming events such as Formula 1, NBA Games and UFC 280 – as well as the FIFA World Cup in Qatar which is anticipated to have spill over effects for this market.
Although summer is the low season for tourism in the UAE, the latest figures, nevertheless, demonstrate the sector’s rapid recovery following the COVID-19 pandemic. Dubai’s Department of Economy and Tourism suggests the Emirate received around 2.95 million overnight visitors between June and August 2022 – a significant jump compared to the 1.17 million recorded for the same period last year. Abu Dhabi witnessed a 24% increase in overnight visitors to 910,000, according to DCT Abu Dhabi.
While luxury and beachfront properties have been performing well, the pick-up in tourism is now also benefitting the mid- to low- segments by capturing demand from source markets that have traditionally supported these categories of hotels.
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