Retail rents in Dubai fall 25% in first nine months

The slide in Dubai and spike in Abu Dhabi retail rents have slowed down and are beginning to stabilize now, according to one of the largest retailers in the UAE.

Viraf Raimalwala, chief operating officer, Homes r us, said that retail rents in Dubai have fallen by roughly 20-25 per cent in the first nine months but the slide is slowing down and rates are more-or-less stabilizing now.

Speaking at the opening of a store in Ibn Battuta mall, he said the retail rentals vary from store to store.

“For example, rent for a small boutique store of 100 square metres can be as high as Dh300-400 per square foot; but when it comes to bigger stores, then rent comes down and is negotiable. And it can be go down up to Dh50-60 per square foot. In some cases the percentage of sales is worked out as rent, there are variations,” Raimalwala said.

Last year, most of the retailers found it difficult to survive due to the financial malaise and the mall managements had to scale down rents due to the decline in sales.

Retail rents in Dubai have more or less stabilized and there could be a slight drop of 10-15 per cent, Raimalwala said after the opening of the nine store of Homes r US in the UAE.

In Abu Dhabi, he said the surge in retails rents is coming to a halt and are stabilizing at the current levels.

“Retail rents in Abu Dhabi kept escalating in 2007, 2008 and 2009. In 2010; but now it seems some kind of stability and as a matter of fact drop in some residential areas. In commercial areas, rents have stabilized and not shooting up as they used to in the past.”

Homes r US added four stores during 2009 and 2010 in the UAE and intends to open one each in Ras Al Khaimah, Fujairah and Abu Dhabi during 2011-12, pump in Dh20-30 million in these new stores, said Raimalwala.

The group already has presence in Bahrain and Qatar and plans to foray into Saudi Arabia and Oman in 2011-2012. “Saudi Arabia has huge potential. In five years, we can put up 10 stores. We are working first on Oman and the KSA… I think KSA should happen in 2012,” added Raimalwala.

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