Dubai: Retailers in the UAE who were affected by the April 16 flooding and water seepage into their outlets are asking their landlords for discounts or rent-free periods during lease renewals.
These savings can help offset the loss of business they suffered because of the rains and subsequent repairs to their outlets, the business owners add.
“There is one outlet of ours in Dubai that still hasn’t opened even more than 30 days after the rains,” said Dr. Dhananjay Datar, Managing Director of Al Adil Trading, which specializes in ethnic Indian food commodities. “The shuttering of the outlet had to do with issues to the building’s foundation, that’s what we have been told.
“Certainly, we are hopeful that the landlord concerned will look favourably into our request for a rent discount or some other savings option. There are other retailers on the ground floor who are in the same boat, so to speak, with outlets that are not open.”
By now, businesses who faced rain disruptions have got a fair estimate on how much it has cost them. Those with insurance protection against business interruption are better off, because a sizeable part of those costs will be covered. Those who don’t are staring at a substantial dent to their cash flow.
Other retailers and businesses whose premises were impacted by water seepage too have been talking to their landlords about some sort of 'compensation' for their losses. "There has been a precedent when forward-looking landlords have actively helped out their tenants during the Covid pandemic," said a retailer.
“The impact on business continuity has varied greatly, with some able to be up and running within a couple of days after April 16,” said Avinash Babur, CEO of InsuranceMarket.ae. “Whereas others suffered catastrophic losses and still with no ‘back to normal’ in sight.
“Loss assessors are working with impacted clients who are insured for business interruption insurance to understand the impact. We will have a better picture after a few months when all the claims come in and get properly quantified.”
One outlet businesses
For the likes of Datar and Al Adil Trading, a single outlet remaining closed will only be a partial dent to their short-term revenues. Even if the outlet was one of the better performing ones within the retailer’s network.
It is those retailers with single store operations that will face the brunt from remaining closed for longer than they had expected.
Initial estimates of damages sustained will get revised in the coming months as these businesses return to pre-rain revenue levels, according to Babur. “Urgent attention has to be given to ensure insured customers get the liquidity to purchase equipment, new stocks, and rent alternative facilities to get the business back up,” he added. “This will reduce the claims on business interruption.
“That being said, most insurers, loss adjusters, etc., are stretched in terms of capacity due to the sheer volume of claims after the rains. A clearer picture will emerge by the close of June.”
Urgent attention has to be given to ensure insured customers get the liquidity to purchase equipment, new stocks, rent alternative facilities, etc. to get the business back up
First priority – take out this insurance
According to industry feedback, only businesses in certain sectors have been regularly taking out insurance against business interruption. For instance, those in manufacturing, logistics and such sectors are regular on taking such policies and renewing them.
We feel that this will become an industry standard in the coming years especially for the SME sector...
For Datar, the rains have been a wakeup call. “I have fire protection and related insurance on the retail outlets, which clearly were not enough to compensate for what happened after the rains.
“We have initiated talks with four insurance brokers to soon take out business interruption cover against such nature created incidents. We have learnt our lessons.”
"We feel that this will become an industry standard in the coming years especially for the SME sector..."
- Asad Ayub Khan of Green Luxury Car Transport
