Dubai's retail sector remains strong and competitive

The analysis further pointed out that in spite of the challenging economic environment, shopping malls continue to expand in the UAE. In 2009, three main Dubai shopping malls opened their doors to shoppers namely, Dubai Mall, the Arabian Centre and Marina Mall. In addition, the biggest mall under construction in the world - Mall of Arabia, with 929,000 square metres of leasable space is expected to open this year. In addition, at least six shopping malls are scheduled to open in Abu Dhabi by 2012 which will add to the buoyancy and robust growth of the retail sector.

The annual Dubai Summer Surprises (DSS) event, aimed at stimulating Dubai's retail and tourism sectors in the slow summer months continues to have an effect. Sales at the emirate's malls rose by 17% during the 65 day festival in 2009, with total revenues at 23 shopping malls across Dubai reaching Dhs1.49bn, up from Dhs1.27bn at the same shopping malls in 2008. What is significant is that retailers have said that their sales during the 2010 DSS were up on 2009 levels.

According to some observers, whilst UAE nationals actively contributed to retail sales, the purchasing power of the UAE's expatriate residents was the fundamental source of the success of the retail sector. Average household consumption in the UAE stood at $14,400 per annum, with this figure expected to rise in the coming years ahead. The successful marketing drive in Dubai, as a global leisure and shopping destination, has had a major impact on the country's retail outlook. Tourism is a central factor stimulating retail growth, with Dubai expecting more than 50 million tourists in 2010, according to the Department of Tourism and Commerce Marketing (DTCM).

Whilst a tightening in credit conditions, decrease in job security, an increase in consumer savings rates and a fall in tourist visitors in the UAE since the onset of the economic slowdown has led to a challenging retail market, the outlook remains upbeat. Indeed, some observers have suggested that consumer confidence has risen robustly since the record highs of 2008. What's more, in the immediate term, the success of the Dubai Metro since its inauguration back in September 2009 has certainly led to an increasing retail footing. With some train stations located inside or adjacent to major shopping malls, retailers are hoping to see sales rise considerably.

HE Hamad Buamim, Director General, Dubai Chamber pointed out that the success of the retail sector lies in its many advantages that it offers to the investors in Dubai. He highlighted the availability of modern infrastructure including the world-class transportation system that facilitates the easy access of the consumers and tourists to various shopping malls and tourists centres that enhances the competitiveness of the retail sector.

Buamim further stressed that Dubai is now a global destination for international brands, trademarks, goods and services thanks to the excellent business environment that attracts the multicultural consumers. It's the appeal of Dubai which directly helps in enhancing the role of the retail sector and its contribution to the development of the Emirate, he said.

The UAE's shopping mall growth is expected to grow significantly by 2010, according to the Dubai based Middle East Council of Shopping Centres. Some observers have estimated that increasing consumer confidence in the months ahead which will lead to a pick-up in consumption levels, will see the value of retail sales grow by 3.6% in 2010 (see table 1). Hence, the wholesale retail trade sector which has been growing at an impressive average annual rate of 18.5% since 1995-2009 (see figure 1), is expected to continue to grow in the short-term.

Overall, the presence of a significant number of retail complexes in the UAE is indicative of the thriving economy. As the UAE recovers from the effects of the global economic downturn, a pick-up in consumption levels as households have higher real disposable incomes (on the back of falling inflation), an easing in credit availability as well as an expected influx of tourists in the second half of this year and in 2011, will all encourage cash flow within the retail sector.