Construction work in progress at near Deira Gold Souq. Image Credit: Atiq ur Rehman/Gulf News

DUBAI: The historic Deira Gold Souq — one of the most visited locations in the city — is going through an extensive transformation. A whole new cluster of buildings, including those with residential and hospitality elements, is being built on a prime stretch of land and adjacent to the existing Gold Souq. A Dubai Government-owned master-developer is overseeing the project.

“From the designs we have seen, the new buildings will add a completely different dimension to the area,” said Anil Dhanak, Managing Director of Kanz Jewellery and a board member at the Dubai Gold & Jewellery Group. “There will be about 200-plus stores for jewellery retailers and separate office facilities for wholesalers.

“It was getting to a point where it was quite difficult to find new space in the old Gold Souq. And there were limits to how much renovation could be done to the older buildings there, which have been around for 20 years or more.”

The new development is happening across a stretch between the public library and the outer limits of the new fish market, sources in the jewellery sources said. Until now, this was principally barren land and used as a temporary parking area. (This forms part of a wider masterplan to give a comprehensive makeover for the older parts of Deira. And offshore, Nakheel is building a full-scale destination in the form of “Deira Island”). Outside of Dubai’s top malls and its theme parks, the Deira Gold Souq remains a must-see for a sizeable number of visitors to the city. And this is so irrespective of how international gold prices are faring at any particular time.

“We believe the first set of buildings could be ready in another 18 months and include the 210 outlets for retailers,” said Abdul Salam K.P., Group Executive Director at Malabar Gold & Diamonds and a board member on the Dubai Gold & Jewellery Group. “It’s still too early to talk about the leasing rates — but there is certain to be a premium given their newness and the features built into them.”

The retail portion will occupy the ground floors of the new buildings, and have an average size of 300 square feet plus.

But the master-developer has made a point of retaining the “atmosphere” of the original Gold Souq. “The designs suggest the new will have seamless connections to the older areas of the Gold Souq, and this will help retain the atmosphere,” said Salam. “The narrow alley ways, the high density constructions over what is essentially a mid-sized area — these are all what makes the original Gold Souq so unique.”

And it was there that Dubai’s status as a the “City of Gold” was minted through the years. It has been a sought after destination among tourists wanting to pick up gold and jewellery at some of the most competitive rates anywhere. And right through the year, there would be high visitor traffic flowing through the stores, buildings and adjoining areas. It was also a part of the city that seemed disconnected from the rush of developments happening elsewhere.

Not any longer. But the new buildings coming from a single developer will also alter the real estate dynamics of the older areas of the Gold Souq, according to Dhanak.

“Already there are reports of “key money” (what is paid as a one-time payment to secure a store) has come down in the older areas,” said Dhanak. “And this was an area that historically had some of the highest going rates for key money anywhere in Dubai.

“Individual landlords in the older sections could be in for a tougher time once the new construction comes up. It will be interesting to see what this might do on rental rates there. As of now, rents have not been reduced.

“Current rents for a small outlet is anywhere from Dh1 million depending on the location and its prominence.”