As the emirate gears up for the Dubai Shopping Festival (DSF), with retailers announcing offers and tourists flocking in, Dubai Gold Souq is once again in the spotlight.
When residents and visitors alike look forward to grabbing kilograms of gold on offer, shopkeepers are vying for a space in the Souq. It is alleged that key money for a small kiosk in the Gold Souq building is about Dh4 million now up from an earlier Dh1m.
Sunny Chittilapally, Chairman and Board Member of Dubai Gold & Jewllery Group, said: “Key money for a small kiosk in Gold Souq has gone up substantially. The current key money rate ranges between Dh3m and Dh12m per shop. The amount depends on the size of the shops.”
The going rate for a 60 square feet shop in the souq is Dh4m, he said and added that he had paid Dh3.5 million several years when he opened Chittilapally Jewellers in the Souq. Today, his shop can easily demand Dh15m as key money million, he said.
Chittilapally paid Dh16m in just key money for his shops in the Souq. He also owns Elite jewellers and a few other brands.
Key money is paid when an outgoing tenant arranges transfer of his lease to a new occupier, who pays him a premium for this service. This is an informal exchange of money without a receipt.
Naser Oorakam, an Indian real estate agent, said shops in other areas also have hiked up key money. A small shop in Bur Dubai demands Dh300,000 as key money at present.
Meanwhile, rents for shops in the Gold Souq have also significantly increased. Rents for an average shop are anything between Dh150,000 per year and Dh800,000, again depending on its size, according to Chittilapally.
“Traders are ready to invest millions in key money and pay high rents because they are confident of generating good business. On an average 400 kgs to 500 kgs of gold is sold through 600 shops in the area daily,” he said.
In fact, rents in the Souq did not see a drastic fall at all, even when it declined in other areas. According to another jeweler, the rents had just fallen to realistic levels, but now have shot up again.
Biju Joy, General Manager, Dubai Gold and Jewllery Group, said: “Hundreds of tourists from around the world, especially Russia, India, Pakistan and GCC countries visit Dubai, and Gold Souq in particular during DSF. The souq houses more than 600 shops.”
It is interesting to see how tourists like to be photographed in front of gold shops, he added.
Also DSF will see several unique displays. Khanz Jewellers claims to have the world’s largest gold ring, which will be displayed at the entrance, he added
Four jewellery chains have opened their kiosks in Gold Center Building, including BRR Jewllery and Sky Jewellery.