Al Wahda Mall in Abu Dhabi will more than double in size by 2012, giving the capital a much-needed increase in shopping options.
Mohammed Nauman Thakur, the general manager of Al Wahda Mall, said the extension would add 220 stores to the more than 150 now operating.
"Al Wahda is going to become a power mall," he said.
With the high spending power of those who live in the capital, and the growing number of tourists for events such as the Formula One Grand Prix, there is an undersupply of high-quality shopping malls, says the property consultancy Jones Lang LaSalle.
Abu Dhabi had about 1.4 million square metres of leasable retail space at the end of the third quarter of this year and is short by an estimated 700,000 sq metres, the consultancy says.
"With the market currently undersupplied in terms of quality, many shoppers are shopping in neighbouring Dubai, resulting in a loss of opportunity for the Abu Dhabi retail market," Jones Lang LaSalle said in its third-quarter Abu Dhabi Real Estate Market Overview.
The occupancy rate in large regional malls is more than 95 per cent in the Abu Dhabi metropolitan area, the consultancy estimated.
"There is a waiting list for the very best quality malls as retailers seek to expand their reach in Abu Dhabi," it said in the report.
But there is a wave of supply on the horizon.
The newest addition is Dalma Mall in Musaffah. Dalma had a soft opening in early October and is slowly adding stores. The management of the mall expects that more than 80 per cent of its shops will be trading by the end of the first half of next year. Including Dalma Mall, another 200,000 sq metres of retail space will be available in the capital by early next year after the addition of projects such as Mushrif Mall on Airport Road and Paragon Mall on Reem Island. By the end of 2013, total retail space is expected to reach 2.4 million sq metres, the consultancy said.
This has led some retailers and analysts to worry about a Dubai-type oversupply in Abu Dhabi. Dubai had about 2.4 million sq metres of leasable retail space at the end of the third quarter, Jones Lang LaSalle said. The figure is forecast to reach 3 million sq metres by 2013.
Still, some projects in Abu Dhabi have been pushed back. Yas Mall has been scaled down and delayed until 2014, and Sorouh Real Estate's retail plans for Lulu Island have also been reworked.
David Dudley, the head of Jones Lang LaSalle's Abu Dhabi office, said the future retail market in the capital would still be competitive, and issues such as parking, mix of stores and location would be crucial. Poorer quality malls would suffer, he said.
"There is a lot of supply coming up, and so what will really matter is the right location," Mr Dudley said. "And I would say that Al Wahda is a well-located mall and surrounded by a good catchment area."
Mr Thakur said Al Wahda was also benefitting from continued strong business activity in the capital, which was bringing new residents and commuters from Dubai.
"A lot of people are coming and working in Abu Dhabi, and we're getting an advantage from that," he said.
Customer numbers have grown to between 25,000 and 28,000 on an average weekday, and between 35,000 and 40,000 on weekend days, he said.
The mall extension, already under construction behind the existing centre, will add 47,000 sq metres of leasable space to the 37,000 already in operation.
Mr Thakur said Al Wahda Mall, part of the EMKE Group, which runs Lulu hypermarkets, would start leasing in the coming months.
"There are a lot of retailers that have shown their interest … We definitely feel that there are so many brands that we can add."
