The Gold Souq in Dubai's biggest mall is to be shrunk in size - possibly by more than three quarters - after many retailers say they have been forced by a lack of business to flee without paying all rent owed.
Emaar Properties, the owner of Dubai Mall, is relocating some jewellers with the offer of reduced rent as compensation.
Bhavesh Kumar, the general manager of Select Diamonds, says his shop has been left on a deserted corridor, with dimmed lighting, no air conditioning and little security.
He said at least 50 jewellers had left without paying future rent and were being pursued by Emaar through the Dubai Municipality Rent Committee.
"We did not want to close our shop," said Mr Kumar. "But Emaar made a mistake with the souq's design because no business comes here."
Retailers have been in talks with Emaar Malls, a subsidiary of Emaar Properties, for about 18 months on rent reductions and a redesign of the souq layout to encourage more customer traffic. In that time, jewellers say many of their peers have reneged on rental contracts and left the mall, owing thousands of dirhams to Emaar.
Emaar Malls declined to comment on whether retailers had refused to pay rent or whether there was a disparity in who was paying what.
The jewellers' plight has also been exacerbated by rising gold and silver prices, which hit record highs this week, discouraging consumers from buying.
Anand Datwani, the owner of Kyra store, said many retailers had told Emaar their businesses were making losses and had asked to leave. He said they offered to forfeit the security deposits they had paid, after signing one-year rental contracts, in return for not having to pay further rent owing.
But Emaar has continued to pursue the jewellers, Mr Datwani said.
"It's not like the guys that have left are cheaters, they have been in this business for years, it's just that they could not come to a conclusion with Emaar through dialogue," he said.
Jewellers say they expect the number of shops in the souq to be cut from more than 220 to about 50, with a large anchor fashion store put in place and a number of corridors significantly widened.
The nature of the redevelopment means one shop might pay the full price for leasing its store space, while a neighbouring store might pay nothing until it is relocated, jewellers say.
Mr Datwani said Emaar had promised to relocate all the jewellers that were still operating in the souq, about 60 to 70 stores. He added he had seen documents at the Dubai Municipality showing there would be only 46 stores in the new layout.
A spokesman for Emaar Malls said the redevelopment plan within the Gold Souq occupied less than 2 per cent of the total net leasable area of 3.77 million square feet in Dubai Mall.
"As part of the routine practice of reviewing the tenant mix, the Gold Souq is also being reviewed to meet the growing demand for space from large retail operators across diverse sectors," the spokesman said.
While Dubai Mall hosted a record 47 million visitors last year, jewellers say they see few customers each day because of the souq's "maze-like" corridors. The area is a complete contrast to the vast, open avenues of the rest of the mall, they say.
"Nobody comes here," Mr Kumar said. He added his business had lost more than Dh1 million (US$272,000) in just over two years in the souq. Emaar had offered him a 25 per cent reduction on next year's rent to relocate, he said, but this was still higher than what he had paid in his first year of operation in the souq.
rjones@thenational.ae
