Abu Dhabi retail space concern
The opening of Abu Dhabi's biggest mall next week has highlighted concerns that the city's rapidly expanding retail space may be approaching saturation point. "If you look at the number of people in Abu Dhabi and the number of schemes planned and the number of existing schemes, there is a question mark," said Matthew Jay, a senior surveyor with the property consulting firm CB Richard Ellis, based in Abu Dhabi.
Several shopping centres are in the works in the capital, including Yas Mall on Yas Island, Mushrif Mall on Airport Road and Central Market, an interpretation of the old souq. The total retail supply in the Abu Dhabi metropolitan area was about 1.14 million square metres in gross leaseable area in the second quarter of this year, data from the property consultancy Jones Lang LaSalle show. By 2013, this is predicted to almost double to more than 2.5 million sq metres. But some projects have been pushed back. Yas Mall has been scaled down and delayed until 2014 and Sorouh's retail plans for Lulu Island have also been reworked.
The latest shopping centre to open is the 250,000 sq metre Dalma Mall in Musaffah, which is due to open on Sunday. Dalma Mall is the largest shopping mall in Abu Dhabi, with about 147,000 sq metres of leaseable retail space, said Mark Adams, the general manager. About 23 per cent of Dalma Mall's retail space will be trading when it opens, including the retailers Carrefour and Matalan. About 62 per cent of the mall is leasedand another 35 per cent is under negotiation. The mall's progress has been held back by delays in the construction of infrastructure, such as road access, and retailers' financing issues, Mr Adams said.
"Demand didn't change from the retailers point of view, their ability to commit and deliver did," he said. "A lot of retailers were challenged because the banks wouldn't fund them to open these stores and they were beset by large rental rates in some of the newer malls, particularly Dubai." Demand for retail space began to pick up this year, particularly after Eid, he said. "Rents are stabilised and so has business in Dubai projects. That has given them the confidence that they can continue to invest in projects in Abu Dhabi. This area is completely underserviced and people want to be here."
By the first half of next year, the mall's management expects the facility to have more than 80 per cent of its shops trading, said Ginane AbdelKhalek, a board member with The Developers, the company behind the building. It is currently the only large-scale retail centre for communities off the main island, such as Khalifa city A and B, said Mr Adams. Gurjit Singh, the chief operating officer of Sorouh, a property developer based in Abu Dhabi, said the amount of retail supply coming into the capital may outpace an increase in shoppers.
"Whether in three years we are able to see an upswing in population and also an upswing in the footfall for these larger formats still remains unanswered. It all depends upon how attractive these destinations are going to be," he said. But there is potential for smaller-format shopping centres, Mr Singh said. "The small format have a lot of potential," he said. "Because there are neighbourhoods which will be quite dense."
Mr Jay said the malls that set up shop first and signed up tenants to leases would have an edge over the competition.
Published: October 8, 2010 04:00 AM