The UAE’s retail sector is projected to expand at a CAGR 4.9% and reach $71 billion by 2021, indicates Dubai Chamber of Commerce and Industry.
At the end of 2016 the value of the UAE’s retail market was estimated at $56.6 billion, according to data from Euromonitor International. The sector contributes around 11% to the country’s GDP, while Dubai’s retail and wholesale sector accounts for a larger percentage, 29%, of GDP.
Retail remains robust
Demand within the UAE’s retail sector remained steady last year, supported by a 5.8% year-on-year increase in footfall within shopping malls supported by a rise in the number of tourists, absence of sales tax, in addition to the expansion of sales events, promotions and shopping festivals.
Credit card business transactions were up 5% year-on-year during the Dubai Shopping Festival 2016, signalling rising consumer confidence.
The largest shopping malls in the UAE witnessed a steady increase in the number of visitors, which can also be attributed to the expansion of retail space, entertainment and food and beverage offerings.
Non-store retailing, mainly in the form of e-commerce activity, accounted for only 3% of all sales. However, momentum is gaining within this market segment, which is projected to see double-digit growth in the medium term.
New retail space comes available
Around a quarter million square meters (sqm) of new retail space was added to the emirate last year, marking the highest level since 2010, according to JLL. This figure brought the total volume of completed gross leasable area (GLA) in Dubai to 3.4 million sqm by the end of 2016. No major change in supply kept the total GLA in Abu Dhabi stable at 2.6 million sqm.
Some of the major projects completed in 2016 included the expansion of Dubai Festival City, phase 2 of The Avenue in City Walk and the Ibn Battuta Mall phase 2.
Market outlook is promising
Around 717,000 sqm of new retail space is expected to be added in Dubai by 2018, while Abu Dhabi is forecast to see a supply increase of 467,000 sqm over the same period. Demand for retail space is projected to see a moderate increase in the medium term, which may potentially lead to market saturation.
Dubai enjoys several advantages that will drive growth in the retail sector going forward, feels Hamad Buamim, president and CEO, Dubai Chamber, such as the constant influx of tourists to the emirate, rising incomes and its ability to attract retailers from around the world.