Abu Dhabi tops UAE for shopping centre development
Emirate placed 18th globally in latest CBRE research
Abu Dhabi has 778,000m2 of new retail space in its development pipeline, placing the UAE capital amongst the leading cities globally for shopping centre development, according to the latest research from global property advisor CBRE.
The new centres include the huge Yas Mall on Yas Island which is due for completion in the final quarter of 2014, along with other major centres such as Capital Mall in Mussafah and Sowwah Central on Al Maryah Island.
During 2013 Abu Dubai delivered 168,000m2 of retail space, placing it in 18th position globally for shopping centre space completed, and number one in the GCC region. In comparison, last year Dubai delivered just 35,000m2 of retail space.
“Abu Dhabi is witnessing significant retail space development, as it looks to establish itself as a prime destination for entertainment and shopping. New retail destinations such as the recently opened The Galleria are helping to increase the emirate’s exposure, bringing new retailers and concepts to the region,” said Nick Maclean, managing director, CBRE Middle East.
The increasing demand for retail space is supported by strong economic growth along with an influx of a large number of tourists and expatriates. Consequently, occupancy rates remain high, particularly in the major malls where less than 5% of space is empty. The larger centres have also benefited from a buoyant hospitality market which has boosted visitor numbers.
On the back of strong occupier demand, many major mall operators in Dubai are pressing ahead with extensions to their existing centres, including Mall of Emirates and Dubai Mall. Currently this accounts for almost a quarter of the total retail space currently under construction in Dubai.
Across the world’s major cities, a total of 39mn m2 of shopping centre space is currently under construction, representing a 3mn m2 increase from 2013 with majority of the development activity focused on China.
Indeed, more than half of the shopping centre space under construction in the 180 countries surveyed is taking place within China’s borders.
Shanghai takes first position with 3.3mn m2 of space under construction – more than the combined total of all 86 European cities excluding those in Russia and Turkey. Just behind Shanghai is Chengdu with 3.2mn m2 followed by Shenzhen and Tianjin with 2.7mn m2 and 2.5mn m2 under construction respectively.
Other markets in the top ten include Istanbul, Wuhan, Moscow, Beijing, Nanjing, and Guangzhou.
In Southeast Asia, nearly 40% of the 3.3mn m2 under construction is located in Kuala Lumpur, making it the 12th most active market globally. In Vietnam, Ho Chi Minh City and Hanoi have also seen a large number of new developments in suburban areas and are seeing strong leasing demand from retailers attracted by lower rents and the lower-to-mid income residences nearby.
Buoyant occupier demand is pushing a strong development pipeline in New Delhi with 500,000m2 of new retail space currently under construction.
In Europe, Russian and Turkish cities continue to dominate the development pipeline. The most active market in Europe is Istanbul with 27 centres (1.9mn m2) currently under construction. As in other markets, much of this new space is away from the city centre in peripheral locations.
Moscow leads the development for Russia with 1.5mn m2 of space due to open over the next three years. However, development activity is also at an all-time high in regional cities, such as St Petersburg, Yekateringburg, Samara, and Novosibirsk, with some 2.6mn m2 due for completion in 2014 alone.
Natasha Patel, EMEA retail research, CBRE, commented: “Global development activity is similar to last year in terms of location with new construction dominated by Asia and in particular China.
“The scale of new development there is due not only to economic growth in the region, but also due to the demands of cross-border retailers, many of whom have found that the existing retail space in the region is not of the standard they require.”
Of the 35 new centre openings in Europe in 2013, 26 were in Eastern Europe, with only four in Central Europe and just five in Western Europe.
Although new shopping centre development remains at historically low levels in much of Western Europe, many larger centres have extensions planned to accommodate the strong occupier demand for the best retail destinations around Europe.