Abu Dhabi lacks destination malls

Monday, Jul 22, 2013

Dubai: Although malls in Abu Dhabi are successful, analysts say they should become more of a destination.

To have more destination malls in the capital, a strong leisure component should be developed within the malls.

“The leisure component will make them destination malls,” said Mat Green, head of research in the UAE at CBRE Middle East.

This will “limit customers going from Abu Dhabi to Dubai to meet that demand,” he said.

Currently, Marina Mall is the main destination mall in Abu Dhabi.

But Yas Mall, slated to open in March of 2014, is expected bring the leisure offering that the Abu Dhabi retail market lacks.

“I think Yas Mall will be comparative and competitive to what Dubai offers. It’s going to be an important leisure area, and attract new tourists to the market,” Green said.

With a retail trading area of 235,000 sq. metres, Yas Mall will be the largest mall in Abu Dhabi and the second largest in the UAE. The project is planned by Aldar Properties for Yas Island.

It will be connected to Ferrari World, adding to the area’s leisure offering.

There are a number of malls in the supply pipeline, including the Galleria at Sowwah Square, Capital Mall in Building Materials City, Deerfields Town Square in Bahia, Emporium Mall at the Central Market, Reem Mall and Saadiyat Mall. Most of the malls in the pipeline are expected to materialise between late 2014 and 2018, according to a new report by Jones Lang LaSalle (JLL).

Every mall will have its own leisure positioning, said David Dudley, head of the Abu Dhabi Office at JLL.

“Saadiyat Mall will be focused on museums, while Yas Mall will be a multi-functional leisure destination,” Dudley said.

As new malls open in Abu Dhabi, “they will come under strong competition directly with each other,” Green said. The older malls, too, are trying to be competitive and are redeveloping themselves by undergoing refurbishments.

“The leisure component will be increasingly important for Abu Dhabi malls. Any new retail offering will incorporate leisure activities to compete with other malls in the market,” he said.

Although malls in Abu Dhabi have leisure attractions, such as cinemas and entertainment areas for children, they have not introduced something different from the fundamentals.

“They are relying on fundamental leisure activities that we see in other malls-nothing significant,” Green said.

“The attractions in Abu Dhabi malls don’t compare to the quality of the leisure attractions we see in Dubai,” he added.

Even with a lack of a strong leisure component, the malls in the capital are successful — some have an occupancy rate of around 100 per cent, according to Green.

Meanwhile, the Abu Dhabi retail market is diversifying its retail offering, highlighted the report.

“Once the new malls are delivered, Abu Dhabi will have a wider brand exposure and some brands that are missing will be there,” Green said.

Undersupply of retail stock

Abu Dhabi’s retail stock has not changed significantly in the second quarter of this year, according to the report.

The central areas of the city, which are more densely populated, such as Reem Island, Sowwah Square and Saadiyat, have an undersupply of retail stock, while Dalma Mall and Bawabat Al Sharq have an oversupply of retail stock, Green said.

However, “the retail supply in Abu Dhabi will double in the next four to five years, and that will have a big impact on the market and existing centres,” he said.

Growing retail space

Abu Dhabi’s retail space is also expected to grow.

According to JLL’s report, total retail space across the Abu Dhabi metropolitan area stands at around 1.78 million sq. metres, with an estimated 349,000 square metres expected to be delivered in the second half of this year. By the end of 2015, total retail space in the city is expected to reach around 2.6 million sq. metres.

There is demand for regional and super regional retail space, with a range of 30,000 to 90,000 square metres, and 90,000 to 150,000 sq. metres.

“There is a need for high quality regional malls in Abu Dhabi,” Dudley said.

But with the advent of Yas Mall, Saadiyat Mall, Sowwah Central and Reem Mall, the demand for super regional space will be met, stated the report.

By Sarah Algethami Staff Reporter