Falling commercial rents have made retail space in the UAE among the most affordable in the world, according to a report released yesterday.
Abu Dhabi ranked 57th on Cushman & Wakefield's comparison of costliest retail locations by country, down from 42nd last year.
The property consultancy showed Abu Dhabi passing Dubai as the most expensive market in the UAE, with rents at Abu Dhabi Mall listed at Dh2,657 (US$723.35) a square metre per year. Rents in Mall of Emirates, Dubai's most expensive retail space, fell 13.8 per cent in the year to June, to Dh2,647 a sq metre a year, according to Cushman & Wakefied's data.
Affordability will help attract more retailers, said Hannah Jeffery, an associate with Cushman & Wakefield in the UAE. "When looking to open up in the Middle East, Dubai is still seen as the place to open the front door," Ms Jeffery said.
New York's Fifth Avenue still has the world's priciest retail space, with annual rents at Dh87,500 a sq metre, a 21.6 per cent jump from a year earlier. The second most expensive area remains Hong Kong's Causeway Bay, followed by Tokyo's Ginza district, where rents are Dh40,600 a sq metre a year.
Sydney's Pitt Street Mall moved from ninth to fourth on the list, thanks to new shops that pushed rents up 33 per cent.
Paris's Avenue des Champs-Elysees moved into the fifth spot, replacing London's Bond Street as the most expensive shopping district in Europe. Rents on the famous Paris street rose 5.3 per cent in the past year to Dh38,500 a sq metre.
But it is not necessarily fair to compare those exclusive shopping streets to the malls in the UAE, Ms Jeffery said. "High streets are always more expensive than shopping malls," she said.
Overall rents fell 3 per cent in the UAE, largely because of an increase in supply. "As supply increases, developers have to get more competitive," Ms Jeffery said. Abu Dhabi retail rates fell 1.8 per cent in the year. But several new malls scheduled to open in the next year should "improve the quality of retail offering and attract international retailers", the report concluded. The new malls will also put pressure on the capital's retail rental rates, which may again fall below Dubai's, where there are no new malls under development.
"There is a large volume of supply coming on the market [in Abu Dhabi]," Ms Jeffery said. "So we potentially see that [relation to Dubai rates] shifting."
The Middle East and Africa was the only region not to show rental growth in the past year, with overall rents unchanged. The numbers were brought down by declines in countries dealing with political unrest, with rents falling 26.7 per cent in Bahrain and 16.7 per cent in Syria.