In the News
DUBAI ¡ª Hundreds of tourists and shoppers gawk and snap photos of the equally numerous fish swimming behind the glass wall of the nearly three-story high aquarium at Dubai Mall, one of the largest shopping centers in the world.
Built by the giant United Arab Emirates property developer Emaar next to the Burj Khalifa, the world¡¯s tallest tower, the mall¡¯s attractions and luxury boutiques have become a beacon for leisure travelers since it opened more than two years ago.
But just a few hundred meters from the fish tank, in the gold souk on the ground floor, a battle has been brewing between Emaar and the more than 200 gold and jewelry retailers there.
While the rest of the Mall is heaving with tourists, many of the retailers in the gold market¡¯s dark and winding lanes say slack business has saddled them with millions of dirhams in losses.
Retailers like Mahesh Shahani, the owner of the Gems World chain of shops, say it is common for 10 hours to go by without a single shopper in sight. They say customers are deterred by a confusing floor plan and a lack of entries to the souk.
¡°It was a crystal maze. If you saw two people, it was a big thing,¡± said Mr. Shahani, who closed his store in the souk more than two years ago to cut his losses. ¡°We never saw anyone.¡±
Now, Emaar is pushing remaining retailers to vacate their shops, even if that means leaving behind fittings worth hundreds of thousands of dollars.
¡°My lease contract is still active until the end of this year,¡± said one retailer, who withheld his name out of fear of legal and disciplinary action from Emaar. ¡°Why kick me out after I invested two to three million in decorations?¡±
An Emaar statement issued in response to questions said it was standard practice in the mall industry to review and renew the tenant mix. ¡°It is important that the mall routinely monitors customer preferences and develop the mall¡¯s retail mix in line with the market trends,¡± it said.
¡°The Gold Souk is just one of the many components within The Dubai Mall,¡± the statement said. ¡°As part of the routine practice of reviewing the tenant mix, the Gold Souk is also being reviewed to meet the growing demand for space from large retail operators across diverse sectors.¡±
The statement did not respond to questions about specific plans for the souk, or say why tenants were being asked to vacate.
It is a complicated dispute, but it is also a sign of a newly austere retailing era in Dubai. The free-wheeling ¡°build it and they will come¡± attitude in the shopping paradise no longer applies. Empty storefronts have appeared in shopping centers which used to be the main destinations for tourists, like the pyramid-shaped Wafi Mall, as new retail developments have cannibalized the flow of customers.
This is a trend that seemed impossible in the boom times of 2007 and 2008, when the retailers¡¯ biggest worry was whether they would have enough leather purses or designer dresses to satisfy the masses hungry for luxury.
It was during that frenzy that the gold retailers clamored for space in the Dubai Mall, agreeing to rents as high as 800,000 dirhams, or nearly $220,000, a year.
Jawad Ali, the owner of Jewellery Spot, said he was offered 1.4 million dirhams to sell his store in the souk before Dubai Mall opened in November 2008.
¡°We refused,¡± he said. ¡°There are guys who sold their stores just before handover for two million dirhams, just to give you an idea of the demand that was there.¡± But in the six months that Mr. Ali¡¯s jewelry boutique was open, he did not make a single sale, he said.
While the layout of the souk and the record prices for gold crimped their sales, the woes of the greater property sector in Dubai also played a part, he said.
