Dubai should increase Retail Spend per capita to meet up shopping malls growth

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Dubai will need to more than double its annual per capita retail spend to US$ 8,400 by 2010, from the current US$ 3,500 required to make retail space viable, if it is to sustain its massive increase in retail Gross Leasable Area (GLA), according to Colliers International – one of the top three global property service consultants.
 
 Dubai is experiencing a retail boom and forecasts predict a 209 per cent growth in retail space to 4.25 million m² by the end of the decade, which will see some of the world’s most extravagant shopping centres come online.
 
 Stuart Gissing, Regional Retail Director, Colliers International, said: “Assuming that the new shopping centres, that have been announced, will all be completed on schedule, and that no further retail supply is launched, there will be 2.35 m² of GLA per capita in Dubai by the year 2010, an increase of 374 per cent since 2000. This amount of space will require a spending of US$8,400 per capita to make it viable, although this spending  requirement declines by 34 percent, when visitor spending is taken into consideration.”
 
 According to Colliers International’s inaugural GCC Retail Report, the required spend figure for Dubai is not excessive when looking at other major markets. For example, in the United States the comparative figure is US$ 12,000 per annum, while for Europe it is US$ 8,000.
 
 Fortunately for the city’s retailers, Dubai is widely regarded as the tourist hub of the Middle East, with 15 million visitors a year targeted by the Dubai Government to travel to the emirate by 2012. According to ACNielsen, shopping centres currently derive 55 per cent of revenue from tourist visitors, with this figure expected to increase proportionately, reducing the necessary spend for the resident population.
 
 “These figures suggest that Dubai’s retail market has both the capacity and the customer base to sustain its rapid growth in the foreseeable future. According to some estimates, Dubai is set to become one of the most intensively shopped cities on the planet,” said Gissing.
 
 Other countries in the region will also require increased annual per capita retail spend if they are to sustain the increases in their domestic supply of retail GLA. According to Colliers International, the Gulf Cooperation Council’s (GCC) retail real estate market is the fastest growing in the world, with more than 16.35 million m² of GLA expected to be completed by 2010. This increase represents a 565 per cent growth in the available GLA in the region since 2000.
 
 In 2010, Abu Dhabi will have 0.87 m² of GLA per capita – which is 37 per cent of the supply in Dubai, potentially requiring an annual per capita spend of US$ 4,900.
 
 Saudi Arabia’s per capita GLA in 2000 was 0.06 m² and is expected to grow to 0.27 m² by 2010, an increase of 350 per cent. The Kingdom’s population, at mid-2006, was estimated to be 23 million – half of which is under the age of 20, providing optimistic conditions for retailers within the Kingdom to expand.
 
 Qatar’s upcoming supply means that by 2010 there will be 1.07m² GLA per capita, requiring spending of US$ 2,600 per head of population. However, tourism spending will play a significantly lesser role in aiding this requirement. Qatari shopping centre operators believe that visitors account for less than 20 per cent of sales, while 95 per cent of visitors list business as their primary motive for visiting Qatar.
 
 “The inflated spend per capita will be made affordable by high per capita earnings in the country. With a GDP per capita of US$ 36,500, Qatar is one of the richest countries in the world per head of population, creating a highly advantageous environment for retailers,” explained Gissing.

Source: Press Release

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