Dubai malls to hike retail rents 35% in 2011

GM of Easa Saleh Al Gurg Group says retail turnaround has sent rents soaring in Dubai
Arab women mall
By Shane McGinley
Wed 17 Nov 2010 05:51 PM

Landlords
in Dubai malls have raised their rents for next year by as much as 35 percent,
the head of one of the emirate’s largest retail conglomerates has said.

Leaseholders
can expect a significant hike in shop rents following a pick-up in sales across
the emirate, said Abdulla Al Gurg, group general manager of Easa Saleh Al Gurg
Group, which operates brands such as Better Life, United Colours of Benetton
and Unilever.

“Some of the major retailer asset owners have
increased their rents to 35 percent for [2011],” he told Arabian Business. “It
really just doesn’t make sense. What is the rationale behind it?”

Mall
owners are “playing a monopoly role, by owning the majority of real estate in
retail,” he said.

When
asked about specific malls imposing rent hikes, Al Gurg said: “I’m not going to
mention any names but they are quite obvious.”

Mall
sales plummeted in Dubai during the financial crisis as tourist numbers fell.
However, there has been a significant bounce back in retail sales since
September, Al Gurg said.  

“The
earlier stage of the year has really been very bad… [but] it has picked up in
the last three months. We have really recovered the market for around 1.5 to 2
percent from the first half of the year,” he said.

An
analyst for a commercial real estate consultancy in Dubai confirmed that mall
rents are expected to increase by more than a third next year.

Emaar
Malls Group and Majid Al Futtaim Properties, Dubai’s largest mall operators,
were not available to comment.

The
emirate remains an attractive location for retailers. A report by real estate
consultancy CB Richard Ellis earlier this year found Dubai ranks second only to
London in terms of the number of global retail brands with a presence in the
city.

In
a ranking of 294 of the world’s top retailers, more than half had a presence in
Dubai, according to the report ‘How Global is the Business of Retail?’

 “Despite continued uncertainty for some
retailers across the world, luxury brand retailers have remained active and
were responsible for the most new store openings in the past year,” said Peter
Gold, head of Europe, Middle East and Africa cross-border retail at CBRE.

The
family-owned Easa Saleh Al Gurg Group spans 22 companies with interests
including retail, real estate and industry. The conglomerate is predicting 12
percent growth next year, with significant growth expected from its retail arm.

 

Subscribe to our Newsletter

Subscribe to Arabian Business' newsletter to receive the latest breaking news and business stories in Dubai,the UAE and the GCC straight to your inbox.