Mall landlords in UAE are not imposing fines on bounced rent cheques
LANDLORDS GRANT TENANTS RELIEF, BUT STREETSIDE STORES STILL SUFFER
Under the circumstances, when sales are still way below pre-Covid-19 levels, malls managements are taking the long-term view.”
There’s a clear spike in the number of bounced cheques issued by retailers … but so far mall managements in the UAE have not imposed fines on these.
As per their contracts, the penalties for not having sufficient funds to cover the cheques — issued to pay quarterly rents — could vary between Dh1,000 to Dh5,000. “Thankfully, mall managements, by and large, are waiving these penalties even as the number of cases of cheques getting bounced spike,” said the owner of a leading retail chain.
“Under the circumstances, when sales are still way below pre-Covid-19 levels, malls managements are taking the long-term view. They do realise that their tenants are having issues, and imposing a penalty is just not the right way.”
But how long can mall managers take the lenient option? Industry sources say that retailer cash flows will continue to be volatile until such time enough consumers believe they can start spending a bit more freely.
The many sales promotions Dubai’s retail sector is hosting in the next few weeks could give an indication of consumer behaviour. “Offering discounts is the only way shoppers will respond,” said a mall manager. “But the breakthrough for malls and retailers would be when shoppers return even when no promotions are on offer.”
‘Don’t present cheques’
Meanwhile, retailers have been telling their landlords to delay presenting rental cheques until their sales stabilise. “Most of our landlords have been extremely cooperative to such requests,” said the regional head of a restaurant chain. “Only a few single-mall landlords have disregarded this.
“In some cases, we have replaced the quarterly cheques — but it’s all dependent on the location. Landlords are not willing to negotiate on rent reduction or rent deferments at locations where sales have bounced back to almost preCovid-19 levels.” According to retailer sources, the biggest relief packages are coming from the malls … but landlords with street-side locations are still playing it tough.
“There’s less chance of a rental compromise — they would rather see their unit remain vacant than consider offering some rent relief,” said a retailer whose fashion brand is split between mall and highstreet locations. “By summer, if
Owner of a retail chain
sales are not going to improve, these landlords will face an exodus from their stores. More retailers are looking at shifting locations — it’s better to shift than pay the unsustainable rents at the current location and then go out of business.
“These landlords just don’t seem to realise how serious the situation has become postCovid-19. The same old rules of leasing cannot apply any longer.”