UAE malls fine-tuning retail mix to cope with increasing supply
At this time of year, there are some malls in the UAE that one can wander through and wonder how some of the stores manage to stay open, such is the lack of shoppers.
While the height of summer and Ramadan are real tests for any mall’s drawing power, a recent visitor to Wafi Mall in Dubai would have felt very alone while striding through its brightly lit avenues and smiling at the shop assistants standing idly at the doors of their shops.
But just like in life, problems can be overcome only once they are accepted – and so Wafi is changing itself into a mid-range destination mall focused on its core clientele with a new outlook, value offerings and community at its heart.
Traditionally, Wafi was home to high-end products and upmarket outlets, but found its retail mix increasingly out of kilter with the demographics of its location. Occupancy fell to just over 60 per cent two years ago as newer malls moved in.
And so as well as altering its retail mix, Wafi is changing its marketing from the traditional avenues of radio and print to focus online, forging relationships with bloggers.
“We were struggling as other malls offered similar products and a broadershopping experience,” said David May, managing director of MKM Group, the holding company for Wafi.
“We will be 98 per cent occupied by August, with the UK’s value brand Matalan, a mid- range department store, Safeer and Sino Links, a Chinese emporium, joining us. We will also have a full Carrefour hypermarket, a multi-screen cinema and a new four-star, 500-room Rotana hotel.
“We have not increased rents for the past two years, but we have doubled the footfall. We will still have Rolex and other high-end brands but our mix now suits a market with a disposable income that has a lot of options.”
While the retail environment in the UAE is bucking the trend of many other places, where e-commerce is eating into the profits of brick and mortar operations, its challenges are arguably tougher.
While mall space in the UAE is increasing, mall management is having to fine-tune the retail mix to maximise the revenues of the changing catchment areas. The more crowded a field gets, the harder it is to stand out.
With the UAE being such a valuable retail market, the stakes for malls are high – and rising.
The average retail rent per square metre in Dubai’s primary regional malls reflects the returning confidence in the market, increasing from Dh5,000 per square metre in the third quarter of 2013 to Dh7,700 per sq metre (up 54 per cent) in the same period last year. Rents grew from Dh1,725 per sq metre to Dh2,400 per sq metre (39.1 per cent) in the secondary regional malls during the same period, according to JLL’s real estate market overview 2014.
Dubai’s retail space stands at 2.9 million sq metres, with another 194,00 sq metres expected to be delivered this year, according to the property consultants. That figure is dwarfed by the 373,000 sq metres expected to be delivered in 2016 bringing a grand total of 3.5 million sq metres of retail space available in Dubai in the next 18 months.
Abu Dhabi has 2.6 million sq metres available of retail space today with another 87,000 sq metres expected to be delivered this year, plus another 85,000 sq metres in 2016. By the end of next year, the capital will be offering nearly 2.8 million sq metres of retail space.
While a mall’s retail mix is crucial to its bottom line, the ease and accessibility of its outlets is equally important.
Dubai Festival City is currently halfway through a Dh1.2 billion expansion. It has filled in the canal that split the mall, thereby creating another 350,000 sq feet of air-conditioned retail space for 120 new brands.
