Abu Dhabi mall space set to double

Dubai has more shopping space per capita than the US and Europe. Above, Dubai Mall, the world's largest mall by total area.

Abu Dhabi is on track to surpass Dubai with one of the heaviest concentrations of shopping centres per capita in the world, a new report says.

The amount of retail space in Abu Dhabi will almost double to 1.8 million square metres by 2015, said the property broker Cushman & Wakefield.

Dubai, on the other hand, will have virtually no new mall construction in the next five years, the company forecast.

Dubai currently offers 1,385 sq metres of shopping space per 1,000 people, far surpassing the US, at 1,028 sq metres per 1,000 and Europe, which offers a relatively low 231 sq metres per 1,000.

Abu Dhabi ranks behind the US with 936 sq metres per 1,000, Cushman & Wakefield said. But new centres under construction on Yas Island and Reem Island, as well as the Deerfields Town Square centre in Al Bahia, will push Abu Dhabi to more than 1,690 sq metres of shopping centre space per 1,000 residents.

"It shows the significance of the retail sector in this market," said the Cushman & Wakefield associate Hannah Jeffery. "It also suggests we're close to retail saturation."

Abu Dhabi is undersupplied with retail space, Cushman & Wakefield said. Occupancy rates hover at about 90 per cent in most of the large Abu Dhabi shopping centres. But that is going to change as the new ones open.

Older malls without entertainment elements will suffer and have to re-evaluate their mix of attractions or look to redevelop, Ms Jeffery said.

"For the last couple of years landlords called the shots," she said. "In the next few years it will swing to favour retailers."

Landlords in Abu Dhabi are starting to negotiate on leases, offering retailers better deals, said Janet Hansen, the managing director of Al Dyar Real Estate.

"You're getting free periods at the beginning of leases, which was unheard of," Ms Hansen said.

Vacancies at Dubai shopping centres will also increase, even though there will be little new construction, Cushman & Wakefield said. "The demand for new mega malls [in Dubai] is unlikely to rise for another five years," it said.

"For most retailers [in Dubai], expansion plans are either being revised downwards or cancelled altogether," the company's report said.

"Despite strong tourism and a projected rise in consumer spending, there has been an increase in mall vacancies, particularly in two-tier locations that do not attract the same footfalls as the mega malls."

The Mirdiff Centre, which opened in March with 130,000 sq metres of space, may be the last new centre in Dubai for a while. The City of Arabia and Mall of Arabia projects are on hold.

Local centres that "enhance communities" in Dubai will be likely to perform better than the malls, the Cushman & Wakefield report concluded.