(Bloomberg) -- Dubai is set to see retail space surge by 50 percent over the next three years, even as consumer spending slows in the Persian Gulf city, according to real estate adviser CBRE Group Inc.
More than 1.5 million square meters (16 million square feet) of space will be added at the city of 3 million people, CBRE estimates. That’s more than four times the gross leasable area of the Dubai Mall, the world’s largest by total space.
“Vacancy is coming,” said Nick Maclean, CBRE Group Inc.’s managing director for the Middle East. “We are going to see gradual growth in the total retail footprint and quality is going to be important. It’s inevitable that failing malls and retail locations will have to be put to other uses.”
Dubai’s developers are pushing on with construction of developments including retail amid a decrease in spending. Other real estate markets such as offices and homes are already experiencing a glut as building outpaced demand.
The city’s retail market is fragmented, with large regional centers such as Dubai Mall, enjoying occupancy of as much as 98 percent. But the picture is starkly different for the majority of smaller malls and retail centers that often struggle to attract shoppers, fueling competition among retail landlords.
Still, the United Arab Emirates city state has managed to attract 59 new retail brands in 2017, coming second to Hong Kong, CBRE estimates. About half of those brands were in the coffee and restaurant category.
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