Mall rents: have they dropped?
Mall rents in the Emirates have remained constant in spite of the dramatic drops in commercial and residential rental values.
August 1, 2009 2:30 by Dana El Baltaji
Thanks to the UAE property sector’s fall from grace this year, journalists in the Emirates have had plenty to write about. We’ve spoken to angry investors, deluded developers and overloaded Rera officials, and we’ve also been inundated with research notes quantifying the drop in office and residential unit prices in the UAE.
What we haven’t looked at, however, is whether the fall in office and residential rental values, which some studies claim is as high as 50 percent, has affected the rents in malls throughout the UAE.
Before anyone can answer that question, however, Mark Morris Jones, director of Retail at CB Richard Ellis, insists people need to define the word ‘rent’:
“There is a lot of confusion out there about what is meant by falling rent prices. The reality is that when rental values have dropped, has your rent dropped? No,” he said.
“Potentially, your rent could still increase to come to market value. When people say that rents have dropped, what they probably mean is rental value, not the actual rents that people pay.”
The rents people pay are bound by the contracts tenants sign and the laws of the country, while rental values are determined by market conditions. Due to an increase in residential and office units throughout Dubai, however, tenants have been able to renegotiate their contracts to reflect market values.
The same can’t be said for retailers in malls.
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