Plans to enter other emirates, GCC states
Dubai Retail, the recently launched subsidiary of Dubai Properties Group, will add five million square feet of Gross Leasable Area (GLA) to Dubai's retail space by 2011, Haiyan Mujarkech, CEO, Dubai Retail told The Business Weekly.
This will account for a significant share of the emirate's retail real estate, which is projected to grow to 20 million square feet by 2010, from the 14.75 million square feet that is currently on the market.
On track to host three of the world's ten largest malls by this year end, Dubai has established itself as the regional shopping and retail destination. Studies by Middle East Strategy Advisors predict that by 2009, retail spending in Dubai's shopping malls alone will exceed $7.6 billion, the highest among the GCC states.
In a recent report, the Department of Planning and Economy revealed that consumer spending had surged 122 per cent during the last five years, jumping 17.7 per cent to Dh320 billion ($87.1 billion) last year, accounting for almost half of the UAE's gross domestic product (GDP).
Daily spending
The department said daily per capita consumer spending in the UAE stood at $27, more than seven times higher than the average daily spending in the rest of the Arab world and Dubai takes a major share of this expenditure. Per capita, retail space in Dubai alone was estimated to be four times that of the United States.
Mujarkech however insisted that Dubai's retail space supply falls far short of demand. "The growth of the economy necessitates additional retail space. When you see all the buildings that are coming up, it means population is growing." The emirate is home to nearly 1.5 million people today.
"The economy is booming and Dubai has emerged as a major hub for business. We had 34 million people passing through Dubai International Airport last year. The tourism industry is projecting 15 million arrivals by 2010. All these visitors need to shop and Dubai is well on its way to becoming a major tourist and shopping destination. Therefore, we feel the need to provide not only what the local market can consume but also what the region needs," he added.
A necessity
Explaining the rationale behind diversifying into retail, Mujarkech said this was not a case of following Dubai's other leading developers' foray into the sector, but was a complementary function of Dubai Properties' business. "Retail is a necessity.
Everybody needs to live somewhere, shop somewhere. If we're going to build our business around the consumer, then we must go back to the consumer with all types of services, whether it is leasing, retail, community facilities or facilities management. We want to be a one-stop shop for all our customers. The different entities we've established cater to business growth and expansion."
Diversification too does not signal any intention to ease out of real estate development, which some analysts recently predicted, would decline with supply outstripping demand.
"Our internal reports on market trends and sensitivity show continued growth for the real estate sector for the next three to four years and possibly beyond. Our projections have always been for very positive growth," he added.
Mujarkech said Dubai Retail's planned expansion would cater largely to self-demand generated by the group's vast portfolio of properties that have either been completed or are under construction at different sites across Dubai. Recently, it launched The Walk at its 22 million square feet Jumeirah Beach Residence development, believed to be the largest single-phase residential project in the world
By Armenia Fernandes
© The Business Weekly 2008
