By Soren Billing
New research reveals rent drop amid continuing retail slowdown.
Rents for retailers in Dubai fell 10 percent in the first quarter of the year, research firm CB Richard Ellis (CBRE) said on Tuesday.
The CBRE EU-27 Retail Rent index, which includes Dubai, saw a decrease of 3.0 percent during the first quarter and a decline of 1.2 percent on the year.
Prime rents fell by over 10 percent in several markets in the quarter, including Athens, Dubai, Barcelona and Dublin.
“Retail is driven by consumers, and consumers are driven by sentiment. In most regions, the economic slowdown is now being reflected in rising unemployment, weakening income growth prospects and, in many countries, falling house prices,” CBRE said in the report.
Despite government measures to boost spending, consumers are battening down the hatches. Amid high levels of personal debt, many are choosing to save or pay down debt, rather than to spend.
“In some markets, retailers are…known to be negotiating with landlords to secure rent discounts or more favourable lease terms in exchange for agreeing to extend their leases,” CBRE said.
Dubai retailers have called for lower rents amid sliding consumer confidence, a drop in tourism and the opening of new malls such as Emaar’s The Dubai Mall, which bills itself as the largest mall in the world.
Majid Al Futtaim, the largest developer of shopping malls in the Middle East, has said it may raise rents for some of its tenants this year despite a drop in consumer confidence across the region, as contracts typically run over a number of years.
I would like specifics (name names please) of where retail rents have dropped by 10%. In a previous AB article Mall of the Emirates executives stated they may increase rent so I am pretty sure Mall of the Emirates has not decreased any of their rent and neither has Deira City Centre (both MAF properties). So, who decreased their rents by 10%? And why have a headline which leads readers to believe that all of Dubai has seen a decrease when both AB and its readers (many retailers) know this is not true?
It has long been the practice in the retail and commercial sector to announce prices increases to existing customers, knowing that they are already locked in and cant escape easily... Even if they escaped where will they go??? And at the same time offer sweeteners to new incoming tenants, such as nice long rent free periods etc etc, which convert to rent reduction.
I'm sure there are PEOPLE involved in getting to spruce up the image of DXB by giving out false news. I know of a MAJOR retailer who has stores in all the MAF as well as other malls, where the rents are ACTUALLY UP by 7% minimum. When trying to show logic, they are asked to vacate, since there is a waiting list of merchants!! Go Figure...