Consumer confidence in the UAE remained uncertain in 2016 resulting in the Dubai retail market experiencing further softening in the first quarter of 2017, according to a report.  

Well-established malls with higher footfall continue to maintain healthy occupancy rates; however the delivery of additional retail supply is expected to put pressure on overall occupancy rates, stated real estate expert Knight Frank in its latest report.

UAE shopping malls are also expected to experience further competitive pressures from online rivals, as more consumers embrace e-shopping.

According to Knight Frank, the long-term view remains optimistic as Dubai’s retail market is strongly supported by the hospitality sector.

The delivery of Dubai’s new theme park complexes along with the Opera District and other demand generators is expected to drive demand for the hospitality market, which will undoubtedly have a knock-on effect on the retail market.

On the retail market trends, the real estate expert said one of the major ones is the modest growth in sales.

"UAE retailers are now seeing modest single-digit growth in sales due to general macroeconomic conditions," said Knight Frank in its report.

The other vital trends driving the sector include:

*Signs of saturation: An additional 900,000 sq m of space will be delivered over the next couple of years through new shopping centres or expansions.
*Traditional retailers are facing competition from e-commerce leaders such as Amazon. E-commerce sales are expected to account for $1.5 billion of the Gulf’s high-end luxury segment within the next four years.
*Retail strategies: Operators are more often offering promotions and price reductions to entice customers and maintain strong footfall to further enhance and build on the emirate’s strong position as a central shopping hub.
*Electronics market: Supported by Dubai’s position as a regional hub for trade flows and re-exporter of devices in the region the electronics market is expected to grow 4.7 per cent to reach $3 billion by 2020.
*Product diversification: Traditional retail sector is evolving, offering urban-lifestyle destinations, such as Box Park, Citywalk and the Dubai Design District (D3).

Knight Frank said in its view brick and mortar stores will continue to be essential as shopping centres in Dubai provide family entertainment in addition to shopping. "However, retailers may look to realign their real estate strategies to reduce operating costs and invest further into online channels," it added.-TradeArabia News Service