By Soren Billing and Claire Ferris-Lay
EXCLUSIVE: Mall store owners get rent relief but sales still said to be disappointing.
Shop owners say rents in The Dubai Mall are coming down, in a sign that the city’s struggling retailers are getting some relief from landlords.
Several stores in Dubai’s largest mall have had their rents reduced by around 15 percent, but retailers complain that sales in Emaar’s flagship shopping centre continue to be slow.
“For tenants who had to renew their contracts this month there was a new price...but some people chose not to renew it,” one shop owner said.
Sales fell between 35-40 percent between December and January and have been unaffected by this year’s shopping festival, the same source, who owns multiple outlets in several different malls, said.
The Dubai Mall will also reportedly cut back opening hours on Monday, when the festival ends, to close at 10pm on weekdays instead of midnight.
Emaar Malls Group was not immediately available for comment.
Gulf retailers are suffering as tourism slows and a wave of layoffs in the real estate and financial sectors prompts consumers to reduce their discretionary spending.
In a recent interview with Arabian Business, the chief executive of Cravia, whose portfolio includes the Cinnabon coffee chain and restaurant Zaatar W Zeit, said rents in The Dubai Mall were “ridiculously expensive”.
“Emaar is charging probably the highest rents in the world and that has to change,” he said.
Mohi-Din Bin Hendi, president of the Bin Hendi retail empire which includes local franchises for Calvin Klein and Hugo Boss, said in December that the group’s 20 outlets at the newly opened mall had underperformed.
“It would be our request to the management to get the shops to open as soon as they can because it is vital for other people's business that all the shops are open at the same time,” he said.For all the latest retail news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
What happened to all the tourists - one of the articles claimed some very huge number of people visitng Dubai...
Gentlemen, to add more breadth to the discussion will someone enlighten us non retail folks as to what th rents are like?
People cannot be fooled for long; they are just sick and tired of malls that offer the very same things and rip you off in the same manner. Even shopaholics do not frequent these malls anymore; all you find are people squandering their precious time away.
Ever wonder what it takes for the Big-wigs to finally ADMIT they are or were wrong in their investment strategies!!!? Think about it - hype has been and will be part of DXB, regardless of the times, but reality bites the bottom line sooner or later.
I think the rents in Dubai Mall start from Aed 400 per sqft and go upto Aed 1,000 for better located shops. In order to break even rents need to be around Aed 200 per sq ft otherwise thr is no hope. To make money rents need to be between Aed 75-200 depending on the area and products.
Ibn Batutta, Marina Mall, Mall of the Emirates, Dubai Mall...not to mention Jumeirah Plaza, Mercato, The village!!!! How did the "big wigs" ever think they were going to break even with so many malls within arms length of each other!!! I guess one MOE was more than enough to begin with!! I would like to know what kind of planning went into building so many malls in such close proximity to each other... how does diluting the customer base over so many malls help retailers make a profit anyway?? I am business graduate and would like to get an insight on the calculations that these guys make before launching these malls!! If someone does bother reply to this, please do not throw in fictitious numbers of visitors which was built upon over optimism and bravado!!
Why am I not surprised? Even at the best of times and with their clearly overestimated tourist figures, having a handful of mega malls in close proximity is unjustifiable. This is more of an issue now given the global economic crisis and its toll on many industries and at multiple corners of the world. Its time for Dubai business leaders to accept this undeniable fact and adjust accordingly, Dubai mall move to reduce rent is a positive step but much more is needed.
Is it really that hard to follow retail best practice of, A: Populating a shopping mall to reasonbale level of retail, say 70-80% so it is at least worth going to for the consumer and feels full rather than like a ghost town. B: Actually finsihing the build before opening? Honestly Emaar malls told a great story in their communication, but have so far failed to deliver on the promise and premise they set for themselves. If cosumer wanted t shop in a half empty building site, they can do that in numbner of places in Dubai, so why do it at a new one with more of the same shops in, Emaar might want to take a look at Festival City's Festival Centre, finished, clean, working, populated, easy to get in and out of, easy to park in, and a pleasurable environment to be in. Admittedley they too had their problems at the early stages, but they weren't openeing in the kind of environment we have today, or a 10 minute drive from MOE. Dubai Mall - come back when you have something to offer. Other than inconvenience, dust, noise and very little retail.
I represent a well known international brand and have over the last year been in discussions with Dubai Mall to get retail space there. During this time, we have been approved, been taken off the list of approved shops, been told that we will have a shop only to again be told that no decision can be mad at this time as all retail space has been taken. I take note of the comment made by Mr. Bin Hendi and concur that expedited opening of all shops gain all involved. Now why is it that there are so many shops still not opened and most of them doesn't even have "opening soon" signs on them. I expect there are several international brands being given the same run around as us and I am surprised that Dubai Mall has not realized the change in the market from a Landlords market to a Tenants market.
Not suprised either The shame is for those retailers who actually paid in advance for their leases then were advised they no longer could have the site at the rate they paid for and in addition were told the original site was now located for an alternative brand then to add to insult were offered alternative sites at 40% increase in 2nd class locations. ! Says it all really as to why some locations are still not open. Its time landlords took the realistic route and worked together with retailers !