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Sun 22 Apr 2012 12:01 PM

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Mall of Emirates owner to increase rents in 2012

Landlord Majid Al Futtaim will charge higher rates for retailers after bumper Q1

Mall of Emirates owner to increase rents in 2012
Mall of Emirates owner to increase rents in 2012

The owner of Dubai’s Mall of the Emirates has said the company plans to increase rents for retailers this year, as revenues at the shopping hub continue to rise.

Executives at Majid Al Futtaim (MAF) Properties told Arabian Business that rates would go up in 2012 after the mall, home of Ski Dubai, reported a 16 percent rise in sales in Q1.

“Yes, [rents will increase in 2012] because our first quarter of this year is already up 16 percent in sales so that will translate into improved returns for retailers,” Peter Walichnowski, CEO of MAF Properties said.

“We have never dropped rents. Rents are a function of turnover and our turnover is going up. The retailers are always happy to pay more rent if the turnover is going up. In Dubai, our retailers are very happy; we have waiting lists on all our malls, so there is no shortage of retailers wanting to get in.”

Walichnowski added that the company would also boost rates at its Deira City Centre and Mirdif City Centre properties, which he claimed were proving similarly popular with local and international brands.

The cost of leasing retail space remains a controversial issue in Dubai, with mall owners and retailers frequently coming to loggerheads over how much should be paid.

Ibn Battuta, the midmarket mall operated by Nakheel, said in November it had no plans to review rents due to a rising footfall at the mall and high number of brands looking to secure space.

Retailers in the emirate say mall landlords are insensitive to market conditions and rarely amend their lease rates to reflect tougher economic conditions.

The executive director of Dubai Chamber of Commerce, which lobbies for new laws to help businesses in the region grow - and which recently set up a retail unit - said the possibility of a rent cap for malls had been discussed.

However, when asked if there were plans to introduce regulation in the near future, he declined to comment.

“We have discussed a few issues, the rent cap and a few others, where they have both pros and cons for the operator, the retailers and the consumers. We have to strike the balance for everyone.

“In general Dubai and UAE are open economies. [The rent cap] is an issue that will continue to be an area of debate and we will continue to look at it.”

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ARW 7 years ago

and the cycle of boom and bust starts again..

strip the retailers of the money they have worked hard to recover in the lean years, and slam them again with a rent hike..

more and more customers shopping online due to high costs of items in malls due to unrealistic rents demanded by mall owners

just see how festival city is today .. multiple stores boarded up..

Anonymous 7 years ago

Did he say retailers are "happy" to pay more rent??? No, they are not "happy" about it but they do it because they have no choice!!!!!!

leo50 7 years ago

yes; that's Dubai as ever. Reward the consumer for his loyalty by increasing prices and driving inflation ever higher..
Good to see though that at least the Dubai Chamber is voicing some concern unlike most other silent spectators.

Jag 7 years ago

Talk about the galactically stupid !!!

Peter Hudson 7 years ago

There you go again......

Mall owners in UAE are so short term in their thinking that they will 'kill' the proverbial goose that lays golden eggs to get to all the eggs in one day !!!

They (along with their hotel owning counterparts) don't realize that it is an open secret that Dubai is one of the most expensive retail (& hotel) destinations in the world and nobody buys anything from Dubai anymore!! They will kill the nascent recovery due to their greed and the international shopper will once again give Dubai a pass in favour of more 'value for money' destiantions like London, Kuala lumpur and Singapore. Some people never learn do they?

Will the authorities allow that to happen....again??

Asuf 7 years ago

The retail leasing cost is at the hgiest in Dubai, they should infact support the retailers by reducing the prices. Moreover, you have made the asset and dont have any major (above 10 % constuction costs) expenses over the assets.

Further, the new / coming projects are veing well - designed and outlayed to out beat your 10 yr old structure.

Either:
a. Reduce your retnt.
b. Maintain existing rentals and provide enhanced experience.
c. Loose your consumer base

OAB 7 years ago

Rent Hikes = Higher Retail prices
The higher rent costs will be directly transferred to shoppers.
Since 'Us' shoppers seem to be a little more savvy than mall owners.. we will end up going elsewhere to spend our hard earned money..

OAB 7 years ago

Mall managers in Dubai are living in a bubble.. They are clueless to what drives 'profitable' footfall to their mall or what the retailers have to go through to attract 'paying' customers!

The believe that disturbingly loud music, silly dancing shenanigans are the way to get more "footfall" and justify higher rents! .. But this is only turning malls to cheap amusement parks attracting free visitors who just crowd the place and make malls into 'must avoid' places for serious shoppers!

Goods used to be reasonably priced, but now there are much better alternatives in the region and on-line!

I'm afraid all the nice looking, spacious and modern malls will end up looking like cheap crowded souqs because of dancing bears and monkeys and their greedy owners!

Thanks for the cheap thrills, but I will shop elsewhere!

narayan iyer 7 years ago

I dont believe how arrogant and ignorant your statement is .

"Retailers are very happy to increase rent" The way you are going more expensive than new york or london and the people who work in the shops, mall or with you with the same salary that is why they are un friendly and uncoperative .

You keep trying to score a brownie with your boss because niether you or him are in touch with reality .

red herring 7 years ago

i thought mall owners took a % of retail sales
So if retail sales have gone up, then the mall owners have already had their revenues increased.

On the other hand if MOE continues to pull in big numbers due to its shopping variety and location then its a question of economics and a raise is justified .