According to a new survey, Beirut has the region’s most expensive retail property, the UAE-based The National reports.
Despite Dubai’s reputation of being known as the shopping hub and extravaganza in the Middle East, Beirut is now the most expensive city in the Middle East to lease retail space.
Beirut’s City Centre has the highest average retail rent, at $167 per square foot per year, according to a report, Main Streets Across the World 2010, released Tuesday by the commercial property broker Cushman & Wakefield.
After Beirut comes Ramat Aviv in Tel Aviv at $153 per sq ft and ABC Centre Achrafieh, also in Beirut, at $139. Dubai’s Mall of the Emirates is ranked ninth in the MENA region, at $110 per sq ft per year, the report said.
Lebanon’s strengthening economy, and the relatively few shopping centers catering to a smaller population of 2.5 million residents, are the reasons for Beirut’s higher costs for retail space, said Mike Dunn, a retail property consultant who worked on the report.
“We’ve got an undersupply of shops for the population and therefore the shops are doing high turnover,” he said.
“Whereas in Dubai, there are far too many shops, not enough people and a recession.”
Dubai has experienced fewer tourists and vigilant consumers after the economic downturn, which have led a drop in retail sales and a fall in the cost of renting new premises.
The commercial city, Dubai, has witnessed a retail boom over the past five years, with a wave of new shopping centers such as the Dubai Mall, one of the largest in the world.
But prospects are changing in Dubai, with the slump starting to abate, said Michael Atwell, the head of Middle East operations at Cushman & Wakefield in Dubai.
After the opening of Mirdiff City Centre earlier this year, no major shopping malls are expected to open in the near future, he said.
“Dubai has been through its slowdown, and it’s starting to stabilise,” he said. “Visitor numbers are increasing, tourism is increasing again, so there is potential for more stability coming to the market.”
Middle East in comparison to other regions
Retail space in the region remains much cheaper than the most expensive shopping areas worldwide.
Lebanon and the UAE were ranked 30th and 42nd respectively, far behind the most expensive spot, New York’s Fifth Avenue, where rentals are $1,850 per sq ft per year. This was followed by Hong Kong’s Causeway Bay at $1,664 and Tokyo’s Ginza at $877.
Despite the high demand for prime locations, demand for retail space globally continued to soften.
Of 59 countries surveyed, 20 recorded drops in rents over the year to June, with only Latin America and the Asia-Pacific showing rental growth, the report said.
Of 269 retail areas surveyed, more reported declines in rental rates than increases. The pattern was mixed in the region, with retailer demand weakening in Jordan, Bahrain, Qatar and the UAE. Rents were stable or showed modest gains in Israel, Kuwait, Lebanon and Saudi Arabia, the report said.
However, Atwell said major brands continued to enter the Middle Eastern market or expanded their presence.
“The retail offer here is very impressive, and the quality of retail in terms of development is some of the best in the world,” he said.
“We still see that there are international retailers wanting to come into the market.” Markets to watch were Abu Dhabi, where several shopping areas were in development, such as Central Market, and Qatar, he said.
“There is a very strong economic story in Qatar and limited retail there now.
“There are several retail schemes which are planned,” Atwell said. “When those come out, there will be strong demand for the right concept.”
Dubai official sees UAE economic growth in 2010
A senior Dubai finance official predicts the UAE economy will top $272 billion this year, suggesting a strong recovery for the Arab world's second-biggest economy.
Ahmed Humaid al-Tayer told a banking conference Wednesday the federation's gross domestic product should exceed 1 trillion dirhams this year - about $272.5 billion.
He cited increased liquidity and growth in "most essential sectors," such as trade, transport and finance.
The UAE reported 2009 GDP of 914.3 million dirhams ($249.1 million). That implies a 2010 growth rate of over 9 percent.
Al-Tayer is governor of the Dubai International Financial Center banking hub and sits on a committee overseeing the city-state's troubled Dubai World conglomerate.