Published On: 21/03/2021

• UAE currently leads the Middle East and North Africa region in household spending on e-commerce at $2,554 per household.

Dubai, UAE: Retail sales in the UAE are expected to rebound and grow by 13% to reach $58 billion by the end of 2021, supported by pent up consumer demand in the second half of the year, Covid-19 vaccination efforts and Expo 2020 Dubai, new analysis from Dubai Chamber of Commerce and Industry has projected.

The analysis, based on recent data from Euromonitor, predicted that
UAE retail sales are forecast to maintain 6.6% annual growth in the medium term to reach $70.5 billion by 2025, with store-based retailing growth forecast at a CAGR of 5.7%, while non-store retailing is forecast to grow at a CAGR of 14.8%.

Progress related to the UAE’s vaccination campaigns is expected to boost demand in the second half of this year and attract consumers and tourists back to traditional stores. Expo 2020 Dubai, scheduled to kick off in Dubai this October, is expected to be a major catalyst for the recovery of the retail sector, in addition to the support and incentives provided by governments to business sectors at the federal and local levels.

The UAE currently leads the Middle East and North Africa region in terms of household spending on e-commerce at $2,554 per household, which is twice the value of the global average of $1,156, and four times the value of the average in the MENA region ($629).

According to JLL, Dubai saw 110,000 square metres (sqm) of retail gross leasable area (GLA) completed in 2020, which brings the emirate’s total retail stock to 4.2 million sqm.

Meanwhile, Abu Dhabi retail space stock remained unchanged at 2.8 million sqm. During 2021, Dubai is expected to see 761,000 sqm of retail GLA added to the market, while 293,000 of new retail GLA is expected in Abu Dhabi by the end of the year.

As new retail space in the UAE continues to come online in the short term, the market has become more favourable to tenants, due to expected lower rents and more available options, a trend which should support the recovery of retail businesses.

The analysis added that the Covid-led digital shift has created new growth opportunities for regional expansion for traditional retail and e-commerce companies based in the UAE, especially in markets with large populations, such as Saudi Arabia, Egypt, Algeria and Morocco.