Emirates Investment Corporation...

Kiosk Project

Introduction

September 2013 ADM issued a public tender for the exclusive rights to install and operate retail kiosk locations within the Abu Dhabi Emirate. There are two contracts on offer which divides the island east and west down the middle of airport road and east and west of the mainland separated by the new capital district.

The concession is available for 10 years exclusivity plus a 3 year ‘wind down’ period. The concession fee mechanism is by way of a percentage of revenue (gross rent from the kiosk inventory) subject to a minimum annual guarantee (MAG).

Masterplan Context

The Emirate of Abu Dhabi is located in the western and south-western part of the United Arab Emirates along the southern cost of the Arabian Gulf . The total area of the Emirate is 59,402 square kilometres, which represents about 87% of the total area of the UAE.

The Emirate is regarded as one of the richest countries in the world per capita. It sits above 10% of the world’s oil reserve and 5% of the global reserves of natural gas. Abu Dhabi accounts for 90% the UAE’s oil production.

The average monthly temperature between June and August is 30 degrees and the average annual rainfall of just 23mm.

Demographics

According to the most recent official statistics available from the government the total domestic market population is circa 2mn people, with an additional visitor market consisting of tourist and workers of approximately 4m.

The population of Abu Dhabi Emirate reached 2.121 million in mid-2011, with an average annual growth of 7.7%, considered among the highest population growth rates in the world. The main reason for the high population growth in the Emirate is the large migration inflows of expatriates.

The metropolitan areas of Abu Dhabi are currently home to 1.2mn residents. According to the AD Tourism Authority, the Emirate attracted approximately 2mn tourists per annum who stayed on average just under 3 nights. Most visitors’ origins are from the domestic and European markets.

According to Department of Transports estimates The Emirate is also said to pull in more than 10,000 skilled workers from neighbouring emirates such as Dubai on a daily basis (weekdays only)

There are over 3m subscribers to mobile phones within the Emirates with one of the highest internet penetration rates in the region.

Micro Level – Street Retail Trends

Traditionally retail provision has been fragmented, housed within inward facing isolated mixed use towers developments that dominate the main streets within Abu Dhabi CBD. The retail experience has therefore been largely dominated by the floor space it can accommodate typically at ground level.

The trend moving forward will be for speciality retail goods and services to vacate these unsuitable premises in search of better modern facilities including adequate parking and cheaper rents out of town. Land lords will be then faced with revamping or altering their ground floor units to accommodate ancillary retail, offices and food service operations.

Authorities such as the UPC are fully aware of the issue created by the constrained property formats and are attempting to combat this in the future by imposing new planning and signage regulations. Authorities have also attempted to improve the neighbourhood convenience retail offering within the city by imposing new fit out and design regulations under the uniform branding of Baqala.

Real Estate overview

The most comprehensive statistics providing insight into the real estate market is sourced from the global real estate consultancy JLL. The metropolitan office supply is approximately 2.9 million sq m that is expected to grow to over 3.6million sq. m in 2015. Rents have continued to fall since 2008 and are levelling off at AED1,500 sqm. There are number newly completed grade A developments within the CBD and corniche areas.

According to JLL there are approximately 211,000 residential units available in Abu Dhabi in 2013 expecting to increase to over 250,000 by 2015. Prices and Rent have finally reached a plateau and are starting to increase.

Overall retail space stands at between 1.8-2million sq.m consisting of 44% of non-mall space which is a surprising high amount relative to its neighbouring emirate Dubai. This is expected to reduce as more super regional malls come on stream over the next 2-3 years. Retail rents have stagnated over the past 2-3 years. However they are widely expected to pick up in line with as consumer spending as the wider economy starts to improve.

Food Service opportunity

It is estimated that of the 1.78m sqm of retail stock circa 10% consisting of 178,000sqm is made up of food service outlets. In addition to this, Hotels food service offer is estimated to account for an additional 115,000sqm (115 hotelsXav.1000sq m). This would equate to there been approximately 1,000 food service establishments within the Emirate.

Anecdotally, there appears a current shortage of quality food service offering within capital across the board. With only a certain few newly completed destinations providing a visitor environment conducive to a quality dining experience.

According to JLL, rents for food service outlets in shopping malls command rents of AED 2,000-4,000/ sq.m, well above the current retail average.

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