The cost of renting a new store in Dubai fell by at least a fifth in the three months from April to June, according to the property consultancy CB Richard Ellis (CBRE).
The average retail rent on a new shop in a mall dropped by 20 per cent in the second quarter compared with the same period last year, while rents for stores on the ground floor of office and residential buildings were down 29 per cent, CBRE found.
Mark Morris-Jones, CBRE's senior director for retail and industrial property for MENA, said that as consumers continued to cut back on their spending, retailers were reluctant to sign on for new shops, driving the prices down.
"They're in a position where the trading conditions are such that they need to have some sort of guarantee that when they open the shop they're going to do business," he said. "Two years ago, it was a much healthier environment for retail."
A new shop in a Dubai shopping centre cost an average of Dh400 (US$108.90) a square foot in the second quarter, down from Dh500 a year ago, according to Matthew Green, the head of research for CBRE. Rent for a high-street shop cost an average of Dh250 a sq ft, down from Dh350 between April and June last year, he said.
Retailers in the UAE have been struggling this year, especially those selling luxury goods or big-ticket items, with sales down as much as 40 per cent. Renting shopfloor space was one of a retailer's biggest overhead costs and falling rents were good news, said Keith Flanagan, the general manager for Al Ghurair Retail, which manages brands such as Springfields.
"It's good, but the problem is depending on where you are, the rents may be back to 2007 levels, but turnover is back to 2006," he said
The rents might be lower, but to pay them could still mean spending as much as 50 per cent of sales turnover, which was unsustainable, Mr Flanagan said.
"Now retailers have got very little money to invest in anything because of uncertainty of what the future holds," he said. "There has been little increase in sales."
However, for the convenience store chain 24 Seven, which is planning to open between five and seven new outlets this year, the fall in high-street rents had made it easier to expand, according to Martin Pointon, the company's operational director.
The company had originally submitted tenders for retail space on the Dubai Metro. But because rents for shops on the ground floor of residential and office buildings, prime space for a convenience store, had fallen by 30 per cent, 24 Seven abandoned its bids, he said.
"The rents in the market place in Dubai and Abu Dhabi have significantly dropped," Mr Pointon said. "So we can look to grow quicker."
The property management firm Jones Lang LaSalle found that retail rents across all types of shops in the second quarter fell by 6 per cent, on average, compared with the same time last year.
Craig Plumb, the head of research for Jones Lang LaSalle in the MENA region, said it did not surprise him that high street rents were falling faster than in shopping centres.
"What you're finding at this time is there will be a flight to quality," he said. "And it's going to be the bigger malls, with professional management."
High-street shops depended on the people living and working above them, Mr Morris-Jones said, and the softening demand for residential and office space was having a ripple effect on new street-level stores.
"You need a critical mass of people actually using, living and working there, depending on whether it is residential or office accommodations in the towers above, to actually power and drive that retail," he said.
Mr Plumb said he expected retail rents to continue to fall, but not as fast as that of residential and office space because many shopping centre developments had been postponed.
"The retail supply going forward has now been cut, so there will not be as much retail space this year or next year as was originally planned," he said.
"With projects being delayed, that's going to give the market a bit of a breathing space to recover. Whereas in office and residential, there will still be high levels of new supply in the market."
aligaya@thenational.ae
The specs
Engine: 6.2-litre V8
Transmission: ten-speed
Power: 420bhp
Torque: 624Nm
Price: Dh325,125
On sale: Now
Our Time Has Come
Alyssa Ayres, Oxford University Press
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if you go
The flights
Etihad and Emirates fly direct to Kolkata from Dh1,504 and Dh1,450 return including taxes, respectively. The flight takes four hours 30 minutes outbound and 5 hours 30 minute returning.
The trains
Numerous trains link Kolkata and Murshidabad but the daily early morning Hazarduari Express (3’ 52”) is the fastest and most convenient; this service also stops in Plassey. The return train departs Murshidabad late afternoon. Though just about feasible as a day trip, staying overnight is recommended.
The hotels
Mursidabad’s hotels are less than modest but Berhampore, 11km south, offers more accommodation and facilities (and the Hazarduari Express also pauses here). Try Hotel The Fame, with an array of rooms from doubles at Rs1,596/Dh90 to a ‘grand presidential suite’ at Rs7,854/Dh443.
The National's picks
4.35pm: Tilal Al Khalediah
5.10pm: Continous
5.45pm: Raging Torrent
6.20pm: West Acre
7pm: Flood Zone
7.40pm: Straight No Chaser
8.15pm: Romantic Warrior
8.50pm: Calandogan
9.30pm: Forever Young
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
TERMINAL HIGH ALTITUDE AREA DEFENCE (THAAD)
What is THAAD?
It is considered to be the US's most superior missile defence system.
Production:
It was created in 2008.
Speed:
THAAD missiles can travel at over Mach 8, so fast that it is hypersonic.
Abilities:
THAAD is designed to take out ballistic missiles as they are on their downward trajectory towards their target, otherwise known as the "terminal phase".
Purpose:
To protect high-value strategic sites, such as airfields or population centres.
Range:
THAAD can target projectiles inside and outside the Earth's atmosphere, at an altitude of 150 kilometres above the Earth's surface.
Creators:
Lockheed Martin was originally granted the contract to develop the system in 1992. Defence company Raytheon sub-contracts to develop other major parts of the system, such as ground-based radar.
UAE and THAAD:
In 2011, the UAE became the first country outside of the US to buy two THAAD missile defence systems. It then stationed them in 2016, becoming the first Gulf country to do so.
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
The specs
Engine: 6.2-litre supercharged V8
Power: 712hp at 6,100rpm
Torque: 881Nm at 4,800rpm
Transmission: 8-speed auto
Fuel consumption: 19.6 l/100km
Price: Dh380,000
On sale: now
Company profile
Company name: Suraasa
Started: 2018
Founders: Rishabh Khanna, Ankit Khanna and Sahil Makker
Based: India, UAE and the UK
Industry: EdTech
Initial investment: More than $200,000 in seed funding
Living in...
This article is part of a guide on where to live in the UAE. Our reporters will profile some of the country’s most desirable districts, provide an estimate of rental prices and introduce you to some of the residents who call each area home.
2025 Fifa Club World Cup groups
Group A: Palmeiras, Porto, Al Ahly, Inter Miami.
Group B: Paris Saint-Germain, Atletico Madrid, Botafogo, Seattle.
Group C: Bayern Munich, Auckland City, Boca Juniors, Benfica.
Group D: Flamengo, ES Tunis, Chelsea, (Leon banned).
Group E: River Plate, Urawa, Monterrey, Inter Milan.
Group F: Fluminense, Borussia Dortmund, Ulsan, Mamelodi Sundowns.
Group G: Manchester City, Wydad, Al Ain, Juventus.
Group H: Real Madrid, Al Hilal, Pachuca, Salzburg.
