The Evolving Retail Landscape of Dubai and Abu Dhabi: Opportunities, Trends, and Insights for the UAE in 2025

Dubai and Abu Dhabi have firmly established themselves as global retail hubs, offering unparalleled shopping experiences that blend luxury, innovation, and convenience. Yet, as dynamic as these markets are, the retail sector in the UAE’s two largest cities is evolving rapidly, influenced by shifting consumer behaviour, rising costs, and an increasingly competitive environment.

For retailers and investors, understanding these dynamics is critical to navigating the market successfully. At h3hex, we specialise in helping businesses unlock opportunities in complex markets like these, leveraging data and strategy to fuel growth.

In this blog, we explore the current state of retail in Dubai and Abu Dhabi, emerging trends, and what’s on the horizon for 2025.

A Market Driven by Consumer Spending and Growth

The UAE’s retail market remains resilient, with consumer spending surging to $3.7 billion in Q3 2024, reflecting a 4.8% year-on-year increase. Fast-moving consumer goods (FMCG) and durable goods accounted for the majority of this spending, highlighting the ongoing appetite for essential items and lifestyle enhancements. Back-to-school promotions and the rise of convenience retail played a significant role, catering to younger, tech-savvy shoppers.

Dubai and Abu Dhabi’s retail performance is closely tied to population growth and tourism, with both cities benefiting from a growing influx of residents and international visitors. While central malls like The Dubai Mall continue to attract significant footfall, regional and suburban malls are gaining traction, particularly in areas experiencing population booms like Dubai Silicon Oasis and Al Raha Beach in Abu Dhabi. This mirrors trends seen in Western markets, where convenience and accessibility increasingly drive retail decisions.

The Competitive Dynamics of Prime Retail Space in the UAE

Despite robust demand, the UAE retail market is not without its challenges. Prime retail spaces, especially in iconic locations like The Dubai Mall and Mall of the Emirates, remain fiercely competitive. Rental rates in Dubai’s super-regional malls increased by 14.9% year-on-year in 2024, while Abu Dhabi’s community malls saw a 9% rise.

This creates significant pressure for retailers looking to establish a foothold in these premium spaces.

Landlords of high-performing malls are increasingly selective, favouring experienced international brands or those capable of driving high footfall. For newer market entrants, the focus may need to shift towards regional and suburban centres, which offer lower rents and untapped opportunities.

While additional retail space is expected to come online in both cities in late 2024 and 2025, the right suburban malls are set to become a vital growth avenue for retailers.

Segmented Communities and Targeted Strategies

Dubai and Abu Dhabi’s retail landscape is highly segmented, with distinct differences between local Emirati neighbourhoods and expat communities, which themselves are divided by nationality and income bands.

The challenge for retailers lies in ensuring their value proposition align with the specific needs of these diverse communities. Misalignment can result in underperforming stores and wasted investment.

This is where h3hex data plays a crucial role. By leveraging mobility data and visitor demographic profiles, retailers can accurately assess which malls are genuinely busy, understand the demographic profile of its footfall, and ensure that their value proposition appeals. This ensures that investments are not just well-informed but also strategically sound.

Trends and Challenges Shaping Retail in the UAE in 2025

1. Regional and Suburban Mall Growth

As central malls become increasingly saturated, Downtown Dubai becomes increasingly busy, and suburban areas increasingly developed, regional and suburban malls are emerging as key retail growth drivers. These locations cater to the growing suburban population, providing convenience and accessibility that central malls cannot.

Retailers looking to expand in 2025 should closely evaluate these opportunities, particularly in areas like City Centre Me’aisem, Dubai Hills Mall, Mercato Mall, and Mirdif City Centre. While these malls may lack the scale of central hubs, they offer significant potential for capturing discretionary spend as well as non-Discretionary spend.

2. Tenant Mix and Experiential Retail

Curating the right tenant mix is essential for malls to remain competitive. Increasingly, landlords are introducing lifestyle and entertainment concepts alongside traditional retail offerings.

For instance, Aldar’s Saadiyat Grove project in Abu Dhabi aims to combine experiential retail with dining and entertainment, creating destinations that attract diverse demographics. Retailers must align with these trends to capitalise on footfall generated by non-retail attractions.

3. Over-Saturation in Central Malls

While central malls are appealing for their visibility and foot traffic, they also come with risks of over-saturation and high operating costs. Retailers must weigh the benefits of brand awareness against the financial burden of competing in these prime locations.

4. Long-Term Viability of New Developments

Investing in future mall developments poses risks, particularly if these spaces fail to achieve full occupancy or attract consistent footfall. Mobility data can mitigate this uncertainty by providing near-real-time insights into customer behaviour, helping retailers assess the true potential of emerging locations.

5. Consumer Loyalty and Price Sensitivity

Despite the UAE’s reputation for luxury retail, price sensitivity remains a factor, particularly among middle-income expats. Retailers must strike a balance between premium positioning and value-driven strategies to build loyalty in a competitive market.

The Role of Data in Navigating Complexity

Data is the cornerstone of successful retail strategy in Dubai and Abu Dhabi. Yet, reliable data can be difficult to obtain in these markets. At h3hex, we provide actionable insights through advanced analytics, including mobility data, retail tenant profiles, and visitor demographics. These tools enable retailers to:

• Identify high-potential locations with genuine customer demand.

• Understand the unique dynamics of segmented communities.

• Tailor product offerings and marketing strategies to align with consumer preferences.

• Evaluate the long-term viability of investments in new developments.

The retail landscape in Dubai and Abu Dhabi is both challenging and full of opportunity. For retailers looking to thrive in this competitive market, 2025 presents an opportunity to embrace innovation, collaboration, and data-led decision-making. At h3hex, we’re here to guide you every step of the way.