Abu Dhabi retail growth driven by expanding communities

The expansion of residential communities in Abu Dhabi is driving growth in the retail sector, operators said.

The spread of Mohammed bin Zayed City and the rejuvenation of the Musaffah area has spurred the owners of Dalma Mall to apply for approval for an expansion that will double its size from the current 255,000 square metres. Stretching more than 1 kilometre in length, the mall is already home to 320 shops and has a daily footfall of 48,000.

Mall executives have a 10-year strategic plan that includes expanding its entertainment features and adding warehousing space.

“We have a catchment area of about 600,000 people within a radius of 5 km [and] we have 98 per cent occupancy,” said Mohammed Al Mazrouei, board member of The Developers, the mall’s owner and operators. “In the last 18 months we have seen massive growth in the surrounding area and the sales in our stores. The bridges have been finished in the area and the roadworks have gone and now retailers are seeing a month-on-month increase of 20 per cent in sales.”

Only 320 stores out of a total capacity of 420 are currently open because the mall is undergoing a refurbishment and refit which will add four mosques for the surrounding community, including one that can accomodate 400 worshippers.

About 1,200 units were added to the residential stock in the capital during the third quarter, taking the total residential stock to approximately 242,000 units, the property services and investment firm JLL said last month.

“Housing demand remains strong across all price points driven by population growth,” it said.

According to a retail sector report in June from the consultancy AT Kearney, UAE consumers are seeking greater proximity of outlets, leading to more community formats for their convenience. The convenience store segment was the fastest-growing in the country last year, with the number of outlets expected to increase 10 per cent to 443 by 2018, up from 336 this year, Euromonitor said.

In July, 7-Eleven, the largest operator of convenience stores in the world, said it would open stores in the UAE next summer.

Circle K, the Canadian-owned chain, already has 40 stores in the Emirates with 10 stores in Abu Dhabi and plans another four before the end of the year.

“It’s interesting to note that the expansion is coming at the value end of the market. Both Dalma Mall and Circle K deal in ubiquitous brands that are used by the general public and that is where the increase is coming in the population, which of course drives the property sector,” said Craig Plumb, the head of research Mena at JLL.

By 2016 Circle K expects to have more than 100 more stores in the UAE and plans a further 250 after that.

“We see our main growth in Abu Dhabi, when we first came into the market it was Dubai but that has now changed,” said Fahmi Al Shawa, the managing director of Circle K. “It is Abu Dhabi’s growth that is opening up new opportunities for us.”

Last year hundreds of groceries were closed by the Abu Dhabi Food Control Authority after failing to comply with a January 1 deadline to meet the new Baqala standards, which include better refrigeration, shelving and decor.

“Our sweet spot is a 1,000 sq feet store in an area with a captive audience, we are open 24 hours – apart from some specific locations – and backed by a $30 billion company that knows retail and is focused on Abu Dhabi,” Mr Al Shawa said.

ascott@thenational.ae

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