E-commerce having a ‘major’ impact on Dubai’s retail sector

E-commerce set to account for 10 per cent of Dubai’s total retail trade within the “next few years”



Dubai’s retail sector is evolving rapidly with the increased advancement of e-commerce into the sector, with more retail brands offering both online and offline experiences, a new report by real estate consultancy JLL stated.

The report quoted Dubai Chamber of Commerce and Industry as forecasting that e-commerce will account for 10 per cent of Dubai’s total retail trade within the “next few years”.

Citing the recent acquisition of Souq.com by Amazon and Emaar Malls’ acquisition of a majority stake in Namshi, JLL said that online retail was quickly increasing its presence in the emirate.

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In terms of physical retail supply, one neighbourhood retail project was completed in Jumeirah Islands in the second quarter, adding 2,800 sqm to gross leasable area (GLA) to the market.

However, the pipeline for the second half of the year includes 220,000 sqm of GLA currently under construction. Expected to constitute 50 per cent of the upcoming area is The Pointe on Palm Jumeirah and Marsa Al Seed in Al Hamriya.

Meanwhile, Dubailand is also seeing more projects, with 40,000 sqm of GLA scheduled for completed in H2 2017.

“Dubai is undoubtedly the leading retail location within the GCC with 3.39m sqm of retail space, ahead of major cities like Abu Dhabi (2.62m sqm), Jeddah (1.21m sqm), and Riyadh (1.17m sqm),” the report said.

“On an international scale, Duabi has approximately twice as much retail space per capita as London, indicating its reputation as a major international tourism and retail hub,” it added.

Looking ahead, retail supply is slated to grow significantly in the next two years as Dubai prepares to host Expo 2020.

JLL forecasts 580,000 sqm of GLA to come online in 2018, and a further 212,000 sqm to be added to the retail market in 2019.

“Given the soft market conditions, some delays and scaling back of future retail supply could occur,” the report added.

Meanwhile, from a residential market perspective, JLL’s report showed that the sector has recovered from declines of between 5 and 10 per cent over the last two years.

The residential sector witnessed 5,400 completed properties being sold in the first five months of 2017, an increase from the 4,500 units that were sold during the same period of 2016.

“With little change in either sales prices or rentals recorded over the second quarter, the residential market remains relatively stable as the recent down cycle nears an end,” it said.

The consultancy believes that sales prices will also see a dramatic increase within the next 12 months, depending on experienced delay in supplying units.

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