What can we learn from Dubai’s shopping mall phenomenon?

22 February 2017 Category:

As the fourth most visited city in the world, Dubai’s reputation as the leading leisure destination in the UAE is firmly established. Now as the city gears up to host the World Expo 2020, it is expanding its horizons and encouraging entrepreneurs to think big again.

This beacon of Middle East business and commerce, which became a focal point of rapid growth, property development and international tourism a decade ago, is keen to inspire new businesses by combining its great energy with new technology and economic innovation.

So today we’re going to look at one of Dubai’s most famous features – its malls. Yes, they’re cutting-edge retail environments, but what does their continuing success mean for those involved in any form of business (large or small) in the emirate?

The ecosystem of the mall and where your business fits

Dubai’s economy is traditionally fuelled by retail and the mall phenomenon. Currently, wholesale and retail provides approximately 29% of gross domestic product. But it’s how it intersects with other areas, other business sectors, that is key.

Dubai’s economy is traditionally fuelled by retail and the mall phenomenon. Currently, wholesale and retail provides approximately 29% of gross domestic product.

According to a report by the Oxford Business Group, this interlinking between retail and other industries is right at the heart of Dubai’s growth: ‘The transport sector, which brings goods into Jebel Ali Port and millions of passengers into Dubai’s two international airports, helps underpin the retail sector, which, in turn, creates demand for the real estate and construction sectors as new malls and outlets are built and leased. Dubai’s destination malls bring stores, restaurants and hotels together under one roof, creating a one-stop shop for tourists and residents.’

So it’s essentially a knock-on effect, with Dubai’s malls becoming the centre of an ecosystem, one which can offer opportunities to other businesses. With that in mind, Dubai’s plans to further expand its retail footprint mean it’s perfect for entrepreneurs to develop other sectors of the market – from green business, to tech, to transport, to catering – it’s all part of the world with the mall at the centre. 

Malls and infrastructure

Dubai’s malls play a major role in creating and sustaining an infrastructure of shopping and futuristic luxury that is unrivalled around the globe. For example, the Dubai Mall is the largest in the world in terms of total land space used for its vast array of shops on the one million square metre footprint. As the focus of the USD 20bn Downtown Dubai shopping complex (sitting at the foot of the Burj Khalifa), the Dubai Mall has around 1,200 retail outlets and boasts the Dubai Aquarium and Underwater Zoo, an indoor theme park, and the Dubai Ice Rink.

To put that into some global context – other giant malls around the world, such as the massive New South China Mall in Dongguan, have more leasehold space but are not yet fully occupied. West Edmonton Mall in Canada is the biggest in North America but has only 800 shops.

But remarkably, the Dubai Mall is just one of around 70 malls in Dubai, which are part of the city’s expanding infrastructure and the heartbeat of one of the most visited shopping and leisure destinations in the world. And they encourage and boost development around them. The opening of the Museum of the Future, the huge Dubai Safari Park (and around 16 major attractions this year) signal the city’s desire to be a leading centre of worldwide travel and entertainment.

20 million tourists expected in 2020

Why build on this extraordinary legacy? It’s simple. Some 20 million people are expected to visit Dubai in 2020, which is six million more than today. Occupancy levels in the city hotels even now are at around 86.5% in some 93,000 rooms according to Dubai tourism statistics, suggesting many more hotels, malls and enterprises must be built to keep up.

Occupancy levels in the city hotels even now are at around 86.5% in some 93,000 rooms according to Dubai tourism statistics, suggesting many more hotels, malls and enterprises must be built to keep up.

The growth of tourism, leisure and retail will continue as Dubai’s urban areas expand and encourage businesses to set up with new infrastructure creating many new jobs. At the core of this is the ambition to build bolder monuments to mankind’s ingenuity in an ultra-modern city which boasts the traditional-style Arabian architecture of Madinat Jumeirah combined with shops and Venetian-style canals.

The surge in business opportunities, employment, wellbeing and education, inspired by events like World Expo 2020 and the recent World Government Summit, all add up to one thing: A tourism boom in a land of enterprise culture.

Build it and they will come

The future ambition and no-expense-spared approach driving this supercharged emirate is astonishing. Despite these advances, the city authorities admit it faces three main challenges in its quest to be a global centre of travel and tourism: Water supply, food security and self-sufficient cities. With this in  mind, it is determined to overcome these through bold innovation and creating spectacular sights in the process.

One of the biggest changes currently being unveiled is the USD 500m Dubai Water Canal Project, which is transforming Business Bay and connecting the area with the Arabian Gulf. The plan is to create a new business cluster, including a new shopping centre (where there’s a development, there’s never a mall far away), hotels and restaurants as well as luxury houses, apartments and cycling paths. It is expected to provide more than 80,000 square metres of space for public places, private marinas for boats, and a new trade centre at the entrance to the canal.

Another development is the Dubai Festival City Mall extension. The USD 400m investment will add 20% to the area bringing the total to 420 shops. The 300-metre waterfront promenade will have 22 restaurants outside to enhance the spectacular shopping mall and waterfalls inside. With projects like Dubai Creek Harbour, which is three times the size of Downtown Dubai, boasting the world’s tallest twin towers, 3,600 office units, 39,000 residential units, 22 hotels and 750,000 square metres of retail space, you can be sure that shopping, tourism and trade are inextricably linked in Dubai’s blueprint for the future.

Your business doesn’t need to be mall-sized in order to benefit from the retail culture of Dubai. Think of them as beacons that attract other companies who seek to join and benefit from these now world famous shopping destinations.

Your business doesn’t need to be mall-sized in order to benefit from the retail culture of Dubai. Think of them as beacons that attract other companies who seek to join and benefit from these now world famous shopping destinations.

They’re the centre of a thriving business ecosystem – the question is in what capacity do you want to join?

About the author: Neil Petch, Chairman at Virtugroup
About the author: Neil Petch, Chairman at Virtugroup

With a history of business successes, Neil Petch is well known in the UAE and beyond as a visionary entrepreneur with a passion for helping others establish and grow their own businesses. Neil founded Virtuzone in 2009 and quickly established it as the region’s leading company formation expert, before launching Virtugroup, a holding company that has a wider mandate of supporting startups from establishment; to successful market entry; and all the way through to exit.