Dubai retail sector to see shift away from luxury brands
The focus on luxury brands within existing and future shopping malls in Dubai is likely to diminish as the retail sector put increased emphasis on competitive pricing, a new report published by Jones Lang Lasalle on Monday said.
It said that retail tenant favourable conditions - including the offer of more flexible lease terms and rent free periods - would continue throughout 2010 and 2011 as Dubai's shopping sector realigns "to retain value" while Mirdif City Centre, which opened last month, would be the last super centre to be built for at least three years.
Jones Lang Lasalle's (JLL) Dubai retail report for April said the local market was seeing a shift away from luxury goods with "increased emphasis on competitive pricing, creative marketing programmes, convenience shopping and value for money".
JLL added: "This trend is likely to result in the repositioning of both existing and new retail centres away from the previous focus on luxury brands towards value merchandising."
The report predicted that some "obsolescent or underperforming" malls may be redeveloped or even in some cases converted to other uses as owners seek to "realign these properties to retain value".
The report comes as Dubai retailers and mall owners reported a typical decline of at least 20 percent in retail sales in 2009 although anecdotal evidence suggests that sales are now starting to recover with increased footfall and turnover reported by some retailers during the recent Dubai Shopping Festival.
The Dubai Chamber of Commerce reported that total retail spending in the emirate is expected to increase by around four percent in 2010 and by more than eight percent next year.
"With financing difficult to achieve for new mall developments and some sectors of the market approaching saturation, several proposed future malls are likely to be delayed, the JLL report said, adding that no new super regional centres were expected before the completion of the first phase of the Mall of Arabia in 2013.
JLL said that the reduction in the delivery of new retail malls "will give the market the necessary breathing space to absorb the high levels of supply experienced in recent years".
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