UAE landlords including those leasing starting to waive off rents for times ranging up to three months, as the market battle the most horrible effects of the coronavirus-led slowdown. However, landlords have not gone in for direct rent cuts.
Whereas commercial landlords are already starting to offer relief in the form of late payments and/or extended leases, this is stated by Uzair Razi, Chief Investment Officer at Global Capital Partners. Landlords have implicit the nature of the problem in offices and in retail. Whether it’s due to a lack of another possibility or due to the good spirit infused by government stimulus policy, property-owners have extended a helping hand to stressed commercial tenants.
In 2008, there was a Global Financial Crisis was spreader and decision making was slow but this time the decision making is quicker as compared to that situation.
Showing the way
The relief process was started by Dubai-Holding-Meraas, the amount of Dh1 billion packages is offered for commercial tenants at their developments such as City Walk, Bluewaters, and La Mer, among others.
Equally Al-Futtaim Group announced that it will allow rent relief for eligible tenants of up to three months. This will mainly apply to tenants at Dubai Festival City mall, while the group also owns the in recent times opened Festival Plaza in Jebel Ali.
If comes to the government-enforced conclusion of commercial establishments in the city as it steps up the battle against the virus spread.
“Even before the virus outbreak reached a certain level, we had sent letters to landlords requesting some rent-related relief”, the statement by Cyriac Varghese, General Manager at Sky Jewellery.
It is the time when the UAE Government has taken several realistic measures to address business concerns from the top to the bottom. The market needs a rent freeze as well as a rent reduction at the time of the next contract renewals.
Taking the pain
Sharjah-based Alef Group on Thursday approved Dh10 million packages to help retailer-tenants financing in the developer’s Zero 6 Mall.
According to Issa Ataya, Director-General at Alef Group, “The economic support comes after an emergency meeting held by Alef Group’s administration to discuss the most effective ways to support merchants and tenants in Zero 6 Mall following the decrease in the number of visitors to commercial centers.” The funding will cover the value of this year’s rent for eligible tenants whose business has been affected by the coronavirus pandemic.
Informal talks are on
“Yes, extended rent-free periods are being talked about,” said Prathyusha Gurrapu, Head of Research and Advisory at Core, the real estate consultancy.
Market information says that talks are on between tenants – office and retail – with landlords for a major review at the time of renewal. It is predictable that the market cannot in any way support rents even remaining at the current time because of the slowdown in consumer activity in the last two years.
“For better opportunity, tenants are now asking for a 2-4 month rent-free, while for shell-and-core options, 9-12 month rent-frees are what’s being negotiated, with a notice period of one-month and limited or zero penalties depending on the lease term.”
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