Dubai retail market could see saturation

06/01/2008 11:48 PM | By Cleofe Maceda, Staff Reporter


Dubai:  Dubai’s massive retail expansion drew concerns from industry experts on Sunday that the market could reach saturation.

Stan Eichelbaum, president of Marketing Developments, USA, and a professor at Michigan State University, cautioned Dubai against further expansion as it is likely to face problems on filling its enormous retail space.

“We will absorb the current space. I worry about going much further,” Eichelbaum said during the first day of the Retail City exhibition that opened yesterday. He noted that the South China Mall in Dongguan, China, where malls are into a high expansion mode, has already been grappling to find tenants to fill some nine million square feet of space.

“I walked South China Mall a few days ago. I can’t believe I walked it for one day. It’s an unbelievable facility. Their only challenge: they have yet to sign leases and it’s been sitting for four years. The mall will not get filled with their quest for 3,000 retailers. That is absurd and the customer can’t handle it,” Eichelbaum said.

He said in the United States, where shopping space has considerably exceeded the size of the population, more malls are being torn down each year than built, as the industry is “reinvigorating” itself and “looking at new directions.”

Dubai has the greatest agglomeration of retail space in the whole Middle East and North Africa region with some 1.3 million square metres of gross leasable (GLA) area already finished and more underway, according to Retail International statistics. Dubai is expected to see a huge stream of shopping space supply with the completion of at least nine complexes: Dubai Mall, Oasis Mall, Mirdiff City, Mall of Arabia, as well as the five malls recently announced by Nakheel.

With the size of 50 football pitches, Dubai Mall alone is overtaking the size of South China Mall, as it will span 1.11 square kilometres, covering 10 to 15 sub-malls with 840,000 square metres of retail space for more than 1,000 stores.

Eichelbaum said retail expansion is definitely growing rapidly in Dubai, but filling up the spaces will be a “daunting challenge,” so the city needs to “flex and be pragmatic about it.”

“The competitiveness, the more you accelerate it, the more competitive it gets. There is no place where retail is proliferating at a higher rate than in the UAE, and specifically in Dubai. The market is exploding in every way. So, everybody has to outdo everybody else,” Eichelbaum told Gulf News. “But the issue is, is it by size or is it by pragmatism? When you add more retailers, should there be a redundancy of fashion, should there be a redundancy of food, or should we move into new directions,” Eichelbaum said.

Speaking at the conference, Walter Kleinschmidt, president of R2E Consultants in Canada, said Dubai’s GLA per capita is following the American norm of 20 square feet per capita. “So by using the same comparison, we’re going to be looking at very similar issues much more quickly. Everything happens much more rapidly here,” Kleinschmidt said.



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