Shopping Mall Wars Escalating in Dubai

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Majid Al Futtaim plans to spend about Dh1 billion ($272.3 million) to upgrade the Mall of the Emirates in Dubai, in the latest escalation of the battle for mall customers in the emirate.

The renovation of Mall of the Emirates, best known for its indoor ski slope, will include a new fashion district, luxury retail space, and a sports and leisure precinct. Work has already started on a Dh100 million, 5,000-square-meter fashion district, the company said in a statement.

The Mall of the Emirates opened in 2005 and now boasts more than 233,000-square-meters of leasable space, 520 stores and more than 36 million visitors a year, making it one of the biggest shopping malls in the world. But it has not been keeping pace with the nearby Dubai Mall, which is billed as "the world's largest shopping and entertainment destination."

Earlier this year, Emaar, owner of the Dubai Mall, announced plans to expand the center to accommodate 100 million visitors a year. The first phase of the project focuses on a 1 million-square-foot expansion of the fashion areas of the mall.

The Dubai Mall hosted 65 million visitors in 2012, according to Emaar.

Mall of Emirates is the second-largest mall in the UAE, but it will be surpassed by the Yas Mall in Abu Dhabi, which is scheduled to open next spring. The first phase of the expansion will bring an additional 30 international brands to the mall.

"It is important for Mall of the Emirates to keep improving to maintain its top position in the market," Matthew Green of CBRE told Gulf News. "I think there's good potential for further expansion."

The super-regional centers dominate the Dubai market, accounting for 66 percent of mall-based retail space, according to Jones Lang LaSalle

Another 371,000 square meters of retail space is expected to come on line in the next two years, JLL reports. But the vacancy rates in malls has stayed steady at about 13 percent, with "strong occupancy levels in the better performing super regional and regional centers [continuing] to counterbalance the higher vacancy levels in tier-two malls." The average rent in primary malls is Dh5,000 ($1,361) a square meter, according to JLL.

Last fall the government announced plans to develop Mohammed bin Rashid City, a new project which would include what was described as the largest shopping mall in the world.