Dubai
A ‘rental index’ for Dubai’s retail space along the lines of what is there for residential and office categories?
“At the rate some of the malls are hiking their rentals, Rera (Real Estate Regulatory Agency) should step in and enforce the rental index,” said a retailer who has just got hit with a 20 per cent increase at the time of the lease renewal.
He said: “There are arbitrary decisions being enforced ... the outlets occupied by my immediate neighbours have not had similar increases. While the residential index may not mirror all the trends in a particular neighbourhood, it is still a platform for both tenants and landlords to set benchmarks by. And if there are any major deviations from the average, tenants can press their claims in the rental tribunal.
“For the mid-sized retailer, the current rental demands will be extremely difficult to comply with and more so in a weak trading environment. Something needs to be done by the higher authorities.”
Even for the newer mall capacities coming up in the city, some of them still a good two or three years down the line, the cost of entry is more or less on par with prevailing rentals at the leading destinations. “The kind of favourable terms — rentals based on a percentage of sales as opposed to a fixed one — that new malls used to provide in the past are no longer there,” said another retailer.
“That is why even with the substantial new capacity that will come online between now and 2020, retailers will still have to pay top dollar for a mall space in Dubai.”
