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Challenges & opportunities: UAE’s retail sector in 2021

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The UAE’s real estate retail sector is demonstrating its strengths, as it is projected to hit USD58 billion in sales this year. This new analysis from Dubai Chamber of Commerce and Industry represents a year-on-year increase of 13 per cent.

Cityscape Intelligence takes a look at the challenges and opportunities in the UAE’s retail sector in 2021. With the COVID-19 pandemic closing shops across the UAE and consumer demand plummeting, demand is expected in the sector this year.

DEMAND IN THE UAE'S RETAIL REAL ESTATE

However, incredible pent-up demand, the rapid rollout of vaccinations, and the upcoming Expo 2020 Dubai will lead to a huge increase in retail traffic as restrictions ease and national and international consumers return to the shops.

The new analysis projects further growth over the next few years, with retail sales expected to maintain 6.6 percent annual growth, to reach around USD70.5 billion by 2025.

“Non-store retailing”, including eCommerce, is forecast to grow at a much higher rate—14.8%—than in-store retail, at only 5.7%.

This reflects already high retail spending in the UAE, with average spending on eCommerce at around USD2,554 per household. This is double the global average, putting the UAE well ahead of its neighbours across the MENA region.

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BIG OPPORTUNITIES FOR THE UAE'S RETAIL REAL ESTATE

Dubai and Abu Dhabi are both predicted to see a huge increase in retail real estate. According to JLL, Dubai has, as of 2020, total retail stock of 4.2 million square metres. Abu Dhabi, meanwhile, offers 2.8 million square metres.

The UAE’s retail real estate market has become extremely favourable to renters and potential buyers, with increased supply and reduced demand during the pandemic driving down prices. This will lead to more investment opportunities for foreign and local investors, which will in turn drive even greater growth for the country’s retail sector.

UAE-based eCommerce firms are set to benefit from the marked shift towards digital retail, which will also increase demand for logistics and warehousing real estate.

This shift, which is taking place across the region, is likely to open up opportunities for Emirati companies, particularly in high population markets like Egypt and Saudi Arabia.

 

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