x Abu Dhabi, UAESunday 23 July 2017

Shopping sprees add to Dubai's economic revival

Strong financial results by mall operators and retailers are adding weight to Dubai's economic revival.

Emaar's retail outlets, which include Dubai Mall, had increased visitor numbers last year. Jumana El Heloueh / Reuters
Emaar's retail outlets, which include Dubai Mall, had increased visitor numbers last year. Jumana El Heloueh / Reuters

Strong financial results by mall operators and retailers are adding weight to Dubai's economic revival.

As tourism continues to grow, shoppers are flocking to the emirate's outlets, boosting revenues and floor space.

The path to the checkout aisle begins at the emirate's airport. Dubai International handled well in excess of 50 million passengers last year, and official figures claim that hotel occupancy increased by 10 per cent in the first half of the year.

As a result, footfall in the city's malls is surging, translating into healthy sales figures and increasing the demand for floor space.

Nakheel, a state-owned developer, recorded a profit of Dh2 billion (US$544.5 million) last year, as revenue in its retail operations jumped by 23 per cent. Leasing of space in its Ibn Battuta and Dragon Mart malls almost doubled, said the company.

Emaar, the government-controlled owner of The Dubai Mall, the world's biggest shopping centre, said the number of visitors to its retail outlets rose by almost half a million to 5.2 million last year. It said the number of brands sold in its shops increased by 25 per cent.

Another indication of the benefits a buoyant tourism sector brings to the emirate is Dubai Duty Free's record sales last year. The swelling tide of passengers in Dubai's airport terminals pushed up revenue by 10 per cent to Dh5.9bn.

The economic recovery is also increasing the number of residents in the emirate, adding to the shopping frenzy. Dubai's GDP rose by 4.3 per cent, according to preliminary estimates.

Foreign trade bolstered the economy, increasing to a record Dh1.29 trillion in the first 10 months of last year.

Majid Al Futtaim, which operates Ski Dubai and has franchises including France's Carrefour, increased its revenue by 10 per cent to Dh21.6bn.

"We saw a strong performance in our home market UAE, with tenants' sales growing 9 per cent year on year, Carrefour sales increasing 6 per cent and the average occupancy at our comparable hotels over 80 per cent," said Iyad Malas, the chief executive of Majid Al Futtaim Holding.

Dubai's renewed appeal is a tonic for the housing market, and developers with a portfolio spanning retail and residential space are profiting from increasing interest from property buyers.

Nakheel's revenue from its residential arm increased by 17 per cent, said the developer of the Palm Jumeirah.

"Our financial performance … is also proof that investor confidence is back," said Ali Rashid Lootah, Nakheel's chairman.

Fresh demand for housing has put an end to the long decline in rents. According to the property consultants CBRE, rental rates rose by 17 per cent in the emirate last year. Rents and house prices had crashed through the floor because of the 2008 financial crisis, with the property market losing 65 per cent of its value.

Dubai has not been slow to recover its pre-crisis confidence, announcing a series of projects to capitalise on its thriving tourism sector. The emirate plans to build another 100 hotels, including the Taj Al Arab, an oversized replica of the Taj Mahal. Plans for Mohammed bin Rashid City, announced late last year, include a shopping mall that would replace Dubai Mall as the world's largest.

 

fneuhof@thenational.ae