The retail market in numbers
Dubai counts more than 100 shopping malls and countless high-street locations. Total retail floor space grows by 3–5% annually, driven by new community developments and extensions to existing malls. Average rents for retail space range from AED 100 per square foot per year in secondary locations to AED 500+ in Dubai Mall.
Retail sales in Dubai continue to grow steadily, supported by the tax-friendly climate (5% VAT, no personal income tax) and a growing e-commerce sector that complements physical stores with showroom concepts and experience stores.
Community retail as an investment opportunity
Community retail, shops serving the everyday needs of surrounding residential districts, is one of the most stable commercial investments in Dubai. Rapid population growth in new districts such as Dubai Hills Estate, Arabian Ranches III and Town Square continuously creates fresh demand.
Typical community retail tenants include supermarkets, pharmacies, clinics, restaurants, hair salons and laundries. These businesses are largely resilient to economic cycles and sign long leases. Net rental yields for community retail sit between 8–10%.
Investors also benefit from capital appreciation as the community matures and population density increases. Early entrants in areas such as JVC and Dubai South have realised significant capital growth in recent years.
High street and lifestyle retail
Beyond the large malls, Dubai offers a range of open-air retail destinations. JBR The Walk is the city's longest beachfront promenade, with a mix of fashion, dining and entertainment. City Walk in Al Wasl is a premium outdoor shopping street featuring international brands.
Bluewaters Island, home to the Ain Dubai observation wheel, offers boutique retail space in an exclusive setting. La Mer on the Jumeirah coastline combines retail with beach and entertainment.
Retail space in these locations costs AED 1,500–3,000 per square foot to buy, with net yields of 6–8%. Their appeal to premium brands and heavy footfall provide stable rental income.
Fit-out and operating costs
When buying retail space, it is important to factor in fit-out costs and operating expenses. Shell and core units require a full fit-out by the tenant, which can cost AED 300–800 per square foot depending on the concept.
Service charges for retail units amount to AED 25–50 per square foot per year. DEWA costs (electricity and cooling) are a significant expense, particularly for food-related retail. Many buildings in Dubai operate a district cooling system, with cooling charges billed separately.
Insurance, unit maintenance and property management fees (5–8% of the annual rent) also form part of the operating calculation.
Due diligence for retail space
When acquiring retail space, we conduct extensive due diligence. We analyse footfall, population density within a radius of 1–3 kilometres, competing retail in the area and parking capacity.
We also verify the title deed, existing leases, service charge statements, the condition of the building and any disputes with the Owners' Association. For units with a tenant in place, we verify the tenant's payment record and financial health.
Augusta Properties provides you with a complete investment report including yield forecast, risk analysis and comparable transactions in the area.