The days of rocketing mall rents could be coming to an end, at least in the shorter term.
A combination of macro factors such as the strength of the US dollar and the price of oil causing negative consumer sentiment in conjunction with the rise of online commerce is increasing pressure on physical retail in the country.
Online sales in the UAE in 2016 grew by a factor of eight times the growth rate of bricks-and-mortar retailers according to the CBRE’s report How Global Is The Business Of Retail? launched on Tuesday.
The CBRE also said 720,000 square metres of retail space is to be delivered in the UAE next year. It will be more than a fifth of retail space on the 3.4 million sqm figure Dubai currently offers.
“We are seeing a major correction with our retailers,” said Hamad Buamim, the president and chief executive of Dubai Chamber. He said double-digit margins are no longer a reality for many Dubai retailers and it may take two or three years for the correction to play out.
“We believe mall rents should be a percentage of sales, [I do not mean] turnover rent but base rent. Mall owners need to be true partners with their retailers,” said Mr Buamim, referring to the current system where malls apply a base rent independent of a retailer’s performance.
He said the effect of e-commerce was only beginning to be felt. “We have 200,000 members across the UAE yet only 13 per cent are online. Some see e-commerce as a threat, others as an opportunity.”
The sheer weight of retail space delivered in 2018 will add to the pressure on mall rents as well as the malls themselves.
“There are going to be winners and losers, simply put, some malls will fail,” said Nicholas Maclean, the managing director of CBRE Middle East.
He said some malls were charging rent as a percentage of sales and in the next few years that would become the overriding system. “There are 120 retailers queuing to get into Mall Of Emirates [MOE] but not everyone has the vision, scale or scope to rethink their businesses.”
Majid Al Futtaim, which owns and operates MOE, was not so vocal in its support for rent as a percentage of sales.
“We … lease space in our own malls at the going rate,” said Ahmed Galal Ismail, the chief executive of Majid Al Futtaim Ventures.
“When we relocated our new cinema in MOE … we have the same number of cinema seats as we did in the old cinema but our cinema business has grown 70 per cent.”
ascott@thenational.ae
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COMPANY PROFILE
Name: Kumulus Water
Started: 2021
Founders: Iheb Triki and Mohamed Ali Abid
Based: Tunisia
Sector: Water technology
Number of staff: 22
Investment raised: $4 million
THE DETAILS
Kaala
Dir: Pa. Ranjith
Starring: Rajinikanth, Huma Qureshi, Easwari Rao, Nana Patekar
Rating: 1.5/5
THE BIO
Ms Davison came to Dubai from Kerala after her marriage in 1996 when she was 21-years-old
Since 2001, Ms Davison has worked at many affordable schools such as Our Own English High School in Sharjah, and The Apple International School and Amled School in Dubai
Favourite Book: The Alchemist
Favourite quote: Failing to prepare is preparing to fail
Favourite place to Travel to: Vienna
Favourite cuisine: Italian food
Favourite Movie : Scent of a Woman
The White Lotus: Season three
Creator: Mike White
Starring: Walton Goggins, Jason Isaacs, Natasha Rothwell
Rating: 4.5/5
The specs
Engine: Four electric motors, one at each wheel
Power: 579hp
Torque: 859Nm
Transmission: Single-speed automatic
Price: From Dh825,900
On sale: Now
Founders: Abdulmajeed Alsukhan, Turki Bin Zarah and Abdulmohsen Albabtain.
Based: Riyadh
Offices: UAE, Vietnam and Germany
Founded: September, 2020
Number of employees: 70
Sector: FinTech, online payment solutions
Funding to date: $116m in two funding rounds
Investors: Checkout.com, Impact46, Vision Ventures, Wealth Well, Seedra, Khwarizmi, Hala Ventures, Nama Ventures and family offices
Skewed figures
In the village of Mevagissey in southwest England the housing stock has doubled in the last century while the number of residents is half the historic high. The village's Neighbourhood Development Plan states that 26% of homes are holiday retreats. Prices are high, averaging around £300,000, £50,000 more than the Cornish average of £250,000. The local average wage is £15,458.
A MINECRAFT MOVIE
Director: Jared Hess
Starring: Jack Black, Jennifer Coolidge, Jason Momoa
Rating: 3/5
Unresolved crisis
Russia and Ukraine have been locked in a bitter conflict since 2014, when Ukraine’s Kremlin-friendly president was ousted, Moscow annexed Crimea and then backed a separatist insurgency in the east.
Fighting between the Russia-backed rebels and Ukrainian forces has killed more than 14,000 people. In 2015, France and Germany helped broker a peace deal, known as the Minsk agreements, that ended large-scale hostilities but failed to bring a political settlement of the conflict.
The Kremlin has repeatedly accused Kiev of sabotaging the deal, and Ukrainian officials in recent weeks said that implementing it in full would hurt Ukraine.
Women’s World T20, Asia Qualifier
UAE results
Beat China by 16 runs
Lost to Thailand by 10 wickets
Beat Nepal by five runs
Beat Hong Kong by eight wickets
Beat Malaysia by 34 runs
Standings (P, W, l, NR, points)
1. Thailand 5 4 0 1 9
2. UAE 5 4 1 0 8
3. Nepal 5 2 1 2 6
4. Hong Kong 5 2 2 1 5
5. Malaysia 5 1 4 0 2
6. China 5 0 5 0 0
Final
Thailand v UAE, Monday, 7am
In numbers: PKK’s money network in Europe
Germany: PKK collectors typically bring in $18 million in cash a year – amount has trebled since 2010
Revolutionary tax: Investigators say about $2 million a year raised from ‘tax collection’ around Marseille
Extortion: Gunman convicted in 2023 of demanding $10,000 from Kurdish businessman in Stockholm
Drug trade: PKK income claimed by Turkish anti-drugs force in 2024 to be as high as $500 million a year
Denmark: PKK one of two terrorist groups along with Iranian separatists ASMLA to raise “two-digit million amounts”
Contributions: Hundreds of euros expected from typical Kurdish families and thousands from business owners
TV channel: Kurdish Roj TV accounts frozen and went bankrupt after Denmark fined it more than $1 million over PKK links in 2013
FIXTURES
All kick-off times 10.45pm UAE ( 4 GMT)
Tuesday
Mairobr v Liverpool
Spartak Moscow v Sevilla
Feyenoord v Shakhtar Donetsk
Manchester City v Napoli
Monaco v Besiktas
RB Leipzig v Porto
Apoel Nicosia v Borussia Dortmund
Real Madrid v Tottenham Hotspur
Wednesday
Benfica v Manchester United
CSKA Moscow v Basel
Bayern Munich v Celtic
Anderlecht v Paris Saint-Germain
Qarabag v Atletico Madrid
Chelsea v Roma
Barcelona v Olympiakos
Juventus v Sporting Lisbon
