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 ,” 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.