Dubai builders turn to community malls anchored on food retailers Geant and Carrefour

The Deerfields community mall in Abu Dhabi has Carrefour as anchor tenant. Silvia Razgova / The National

The vast size of Dubai’s megamalls has long been one of their biggest draws.

But now less is more as retailers respond to demand for convenience shopping across a slew of recently completed housing developments.

The completion of stalled projects across the emirate is rapidly creating new opportunities for mall operators and hypermarkets which are opening smaller-format stores. They are responding to rising demand from shoppers who do not want their weekly shop to involve a long drive.

Community malls are appearing throughout the city – small neighbourhood outposts anchored by big food retailers such as Geant and Carrefour and often including nurseries, beauty parlours and other small specialist stores.

"On the days when Mall of the Emirates is busy, your typical weekend, few residents want to shop there," said David Macadam, the chief executive of the Middle East Council of Shopping Centres. The mall's Carrefour "may be the largest in the region but it doesn't have the greatest returns relatively. That statistic is held by Deerfields Mall in Abu Dhabi, where dollar-per-basket returns beats every other Carrefour in the UAE. Deerfields may be a large mall, at 80,000 square metres, but it is still described as a community mall built for its immediate neighbourhood. Very little in Deerfields costs over Dh700 – even the Victoria's Secret outlet sells mid-range cosmetics, not upmarket lingerie".

The Majid Al Futtaim (MAF) group in March opened its first My City Centre concept in Nasseriya, Sharjah. With retail space of just 5,540 square metres and 21 stores, it differs widely from its City Centre offering in Deira with 370 stores and Mirdif with more than 460 stores.

It has plans for two neighbourhood malls in Sharjah and an expansion of My City Centre with locations under discussion. The MAF group recently announced the 1 million sq ft mall City Centre Me’aisem in Dubai’s International Media Production Zone.

It targets the burgeoning communities neighbouring the free zone such as Victory Heights, Jumeirah Golf Estates, Jumeirah Village Triangle, Jumeirah Village Circle, Motor City and Arabian Ranches.

Nakheel, the developer of Dubai's Palm islands, has launched several new retail projects in the past two years as it seeks to generate a greater proportion of recurring revenue from its assets and reduce its reliance on more cyclical home sales.

Among them are Nakheel Mall, The Pointe, Deira Islands Mall, Deira Islands Night Souk and extensions to Dragon Mart and Ibn Battuta, along with community retail centres at Jumeirah Park, Al Furjan, International City, Discovery Gardens and Badrah.

“On the business side it helps us to grow our cash flow-generating assets and helps the business in the longer term,” said Sanjay Manchander, the chief executive of Nakheel. “When we had the recession we found cash flow to be scarce and this is an attempt to try to increase the balance of assets that are cash-generating and increase the proportion of assets in the overall business.”

While rents at community centres and smaller malls grew at a slower pace than at the larger malls in the second quarter, spending from tourists and local residents increased, boosting the local retail market, according to the consultancy JLL.

In the secondary retail market, rents rose to Dh2,360 per sq metre in the second quarter from Dh1,725 per sq metre in the same period last year. Vacancy rates have also fallen to 8 per cent in the overall retail market from 13 per cent a year ago.

“Despite the UAE being perceived as a luxury market, there has been a growing demand for convenience retail with the growing number of expatriates as well as tourism inflow,” said Fatemah Sherif, a senior research analyst at Euromonitor International.

With Emaar and Meraas also developing and extending their own neighbourhood retail concepts, the days of the UAE’s super malls may be numbered. However, with Yas Island Mall slated to open in November and plans for Dubai to build the Mall of the World, size still matters.

“The Mall of the World will be here sooner than you think,” said Mr Macadam. “If you look at Dubai Mall and Mall of the Emirates, the two best trading malls in Dubai today, and Dubai with 10 million tourist visitors each year, those two malls are over-trading for their size. Over-trading means there are too many people using it to be comfortable for other shoppers to go there and make purchases. Depending on the month, 40 per cent to 60 per cent of shoppers in those malls are tourists. In 2020 we are expecting 20 million visitors, so we need another major mall.”

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