Thursday, August 27, 2015

Dubai’s retail optimistic with tourism’s wave

Dubai tourism industry’s strong outing in 2014 has clearly had a positive effect on the retail sector. Undeniably, these two sectors have been closely correlated, with millions of international and regional tourists flocking the emirate each year to enjoy what has become known as the fashion capital of the Middle East. Tourists are especially drawn to the many malls and high-end luxury brands that exist in the emirate. Even as Dubai maintains its high rank in the world of retail, the sector continues to cater to an ever wider market. New mixed-use developments and mall expansions are highlights in the city’s retail real estate space.

CBRE’s global market research report “How Global is the Business of Retail?” 2015 edition shows that Dubai retained its position as the second most important international shopping destination globally for the fourth consecutive year, behind London. Dubai has a presence of 55.7% of international retailers, only less than 3% behind London (58%). Last year, Dubai attracted 45 new international brands with high-profile retailers including Hollister, Cavalli Caffe and McQ Alexander McQueen opening outlets in the emirate.

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The growth in Dubai’s retail sector is linked to a strong economic recovery, the increase in consumer confidence and growing retail supply, along with government support to boost tourism. According to Emaar Malls, the Dubai Mall welcomed almost 80 million visitors last year, up almost 7% from 75 million visitors in 2013-further testament to the growing appeal of the Dubai Mall as a major retail destination for international tourists. Around 60% of The Dubai Mall visitors last year were reckoned to be UAE residents and other GCC tourists, while the other 40% were tourists from outside the Dubai's Retail Sector - retailers regional expansion.

Chinese tourists proved to be one of the biggest draws for Dubai’s hospitality market in 2014, with a 25 percent year-on-year growth in Chinese tourists. The UAE government recognises the tremendous potential the retail and tourism industries hold for the economic growth and in line with Dubai’s tourism vision for 2020, significant steps have been taken to achieve the target of attracting 20 million annual visitors by 2020. In 2013, the UAE government announced to grant on arrival visas to 13 additional nationalities from the European Union. Measures such as these will positively impact the tourism sector and enable the emirate to attract more business and leisure travellers, thus giving boost to the retail sector and further strengthening Dubai’s competitive advantage in the global arena.
Dubai remains the clear destination of choice for the majority of brands looking to enter the region for the first time, frequently using the emirate as a stepping stone to wider regional expansion programmes in the GCC. While 2015 is expected to be more testing for the tourism sector in view of the falling oil prices and economical and political uncertainty in some countries, Dubai however has strongly positioned itself as the premier tourist and leisure destination in the Middle East making it relatively resilient to market fluctuations.

The current retail stock in real estate in Dubai measures around 2.34 million sqm. with a retail supply pipeline of around 675,000 sqm. between this year and 2018. This retail pipeline consists mainly of existing mall expansions, including those of The Dubai Mall, Mall of the Emirates and Ibn Battuta Mall. These are in addition to the new malls – Nakheel Mall and The Pointe on the Palm Jumeirah-currently under construction. Additionally, there are key master plans to be developed in the coming decade, mainly Dubai Creek Harbour and Mall of the World. The malls envisioned there will be larger than Dubai Mall, which will potentially change the emirate’s retail landscape drastically.

With plenty to do, excellent infrastructure and world-class shopping and hotel facilities, tourism-driven retail growth in the emirate is set to continue.

Original post from Roots Land Real Estate

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