ABU DHABI: A desert city of gleaming skyscrapers and wealthy foreigners accustomed to packed, air-conditioned shopping malls, Dubai has developed an unexpected problem in recent years: empty storefronts.
Property prices across the United Arab Emirates have declined by about 27% since 2014, and the UAE’s annual growth rate is now below 2%. “It was the easiest job for the in-house leasing team,” said Kennedy, who had decamped from Britain for a job with a Dubai developer. “They’d have a waiting list of 20, 30, 40 different types of tenants who just wanted a slice of it.” Sales were so good, he said, that landlords “could increase the rent by 10, 15% and they probably wouldn’t even notice.”
“The big malls were full, and many developers thought, ‘OK, great. I’m going to build a mall, and it’s going to be full as well,’” Godchaux said. “It doesn’t work like that.” Where tall buildings connect to a new US$272 million retail corridor with space for about 200 stores, only two dozen were open. So, given this landscape, why would Dubai need the equivalent of three more Mall of Americas?
The city’s flagship malls remain popular and profitable, though. The Dubai Mall, one of the largest in the world, fueled a 6% rise in profits for owner Emaar Malls in the first nine months of 2019. Emaar said it’s planning more retail space to match “strong demand from both retailers and visitors.