Dubai: Tenants at leading shopping malls in Dubai are still waiting for commitments on rent reductions once commercial activity restarts in the city. For now, they have only got confirmation of rent “deferments” during the period when the malls were shut.
“Mall managements have so far not said anything about their stance on rent reductions/revisions as soon as normal business activity commences,” said the CEO of a leading apparel brand. “Retailers will need some clarity at the earliest on what their plans on rents.
“These are exceptional circumstances created by the COVID-19. Consumer activity and mall visits will take time to adjust to pre-virus spread levels – mall tenants will need that much time to see a return to normalcy.”
As of now, Al Futtaim Group has announced rent waivers, at its Festival City Mall and Festival Plaza (in Jebel Ali), while Dubai Holding-Meraas was the first to say there will be relief measures afforded to commercial tenants directly feeling the brunt of the COVID-19 disruption. Nakheel too came out with specific measures to address the slowdown.
Need for everyone to be on same page
But retailers say they want all leading malls and mall managements to offer rent relief. But these malls are not yet to show their hand on what they are planning.
“During these early stages, it is not possible for us to assess the full scope and impact of this pandemic on our respective businesses, and as such it would be premature for us to initiate any rent relief plan,” wrote one of the leading names in the mall business to its tenants.
“As per our commitment to support our valued partners, we have issued a statement to all tenants and partners confirming that the gross rent will be temporarily suspended and not payable during the government-mandated closure period.
“We hope this decision will alleviate some of the financial burden caused by the current situation and help you reopen stronger than before.”
But retailers fret this will not be enough. “Rather than a rent deferment for the closed down period, we will need a clear message from malls on rent-free or rent reductions,” said the regional head of an F&B operator.
They shouldn’t raise their hopes too high. In a message to tenants sent by another leading mall operator, it said: “At this point in time we do not have directions related to rental restructures/rental reliefs and will have to review such request further in detail along with our corporate guidelines. “However we have sent out the latest update as shared on 29th of March 2020, to our tenants with regards to the rental cheque deferment procedures. We will keep you posted on further updates, if any, accordingly.”
That’s what retailers are most concerned about – whether there will be any favourable updates.