Will there be enough shoppers for the new Dubai malls?

Dubai is perhaps a third of the way through a massive expansion of its shopping malls. Last spring the Ibn Buttuta Mall added 1.5 million square feet, and then in the autumn the 6.4 million square foot Mall of the Emirates opened its doors with its landmark indoor ski resort complex. This year the Dubai Festival City has added another huge shopping zone in the heart of Dubai.

But the best is yet to come. Next year Emaar will complete its 5.6 million square foot Dubai Mall, a part of the Downtown district featuring the Burj Dubai, the world's tallest building. And in 2008 will follow the largest shopping mall in the world, the Galadari brothers' 6.5 million square foot Mall of Arabia.

According to a report from London based consultants Retail International by 2011 Dubai will be the home of five of the world's eight biggest shopping malls. So are they going to be empty?

Population growth

Not if Dubai's population keeps on growing at eight per cent a year, and the population demographics remain unchanged. That means a large flow of high-end expatriates, the sort who works for a financial institution and spends in some style.

The rapid expansion of the Dubai Financial Centre, just one of a series of well-targeted business clusters in the emirate, is a case in point. Standard Chartered Bank alone intends to move 500 staff into the DIFC before the end of this year, and more than 200 institutions have signed up for the DIFC.

Consider too the credit cards of the 15 million tourists a year that Dubai intends to accommodate by 2010. This is another army of shoppers to keep the tills ringing.

Overbuilding

However, if global precedent is anything to go by then there will come a time when the growth of the malls of Dubai temporarily exceeds the demand from the local population and tourists. It is impossible to absolutely fine tune construction programs to suit any real estate market and the danger is always overdoing it.

Then the usual victims are not the new malls, which have novelty and critical mass, but the older retail accommodation stock. This is where the pain will strike in the retail sector as the new malls open.
They will also be the big spenders in terms of market promotion while older shopping districts will struggle.

Will this be the death knell for shops in Satwa and Karama? Will some of the smaller malls in awkward locations suffer? That looks the almost inevitable price of progress on the Dubai high street.