The owner of Dubai’s Mall of the Emirates has said the company plans to increase rents for retailers this year, as revenues at the shopping hub continue to rise.
Executives at Majid Al Futtaim (MAF) Properties told Arabian Business that rates would go up in 2012 after the mall, home of Ski Dubai, reported a 16 percent rise in sales in Q1.
“Yes, [rents will increase in 2012] because our first quarter of this year is already up 16 percent in sales so that will translate into improved returns for retailers,” Peter Walichnowski, CEO of MAF Properties said.
“We have never dropped rents. Rents are a function of turnover and our turnover is going up. The retailers are always happy to pay more rent if the turnover is going up. In Dubai, our retailers are very happy; we have waiting lists on all our malls, so there is no shortage of retailers wanting to get in.”
Walichnowski added that the company would also boost rates at its Deira City Centre and Mirdif City Centre properties, which he claimed were proving similarly popular with local and international brands.
The cost of leasing retail space remains a controversial issue in Dubai, with mall owners and retailers frequently coming to loggerheads over how much should be paid.
Ibn Battuta, the midmarket mall operated by Nakheel, said in November it had no plans to review rents due to a rising footfall at the mall and high number of brands looking to secure space.
Retailers in the emirate say mall landlords are insensitive to market conditions and rarely amend their lease rates to reflect tougher economic conditions.
The executive director of Dubai Chamber of Commerce, which lobbies for new laws to help businesses in the region grow – and which recently set up a retail unit – said the possibility of a rent cap for malls had been discussed.
However, when asked if there were plans to introduce regulation in the near future, he declined to comment.
“We have discussed a few issues, the rent cap and a few others, where they have both pros and cons for the operator, the retailers and the consumers. We have to strike the balance for everyone.
“In general Dubai and UAE are open economies. [The rent cap] is an issue that will continue to be an area of debate and we will continue to look at it.”