Uncertainty among Abu Dhabi shopkeepers as rents rise up to 150 per cent

Shopkeepers have described having to close shops or reconsider moving after seeing rents increase for another year.

Some shops are closing as rising rents have some shop keepers moving out, such as the this closed shop which was once Yasmin Sweets located on Al Falah Street in the Madinat Zayed neighbourhood of AbuShow more

ABU DHABI // Owners of the capital’s small and medium-sized businesses face an uncertain future after rent rises of up to 150 per cent this year.

Retailers blame building owners, saying they are exploiting the absence of a government rent cap, while landlords say supply and demand were behind the increases.

Mohammed Ashraf, who owned Yasmin Sweets and Restaurant in Abu Dhabi for 11 years, said he closed the business in January because he could not afford Dh600,000 in rent, up from Dh260,000 that he paid until December 25 last year, especially as business was down.

The owner told him of the 130 per cent rent rise in November.

“I met him four times to convince him but nothing worked,” Mr Ashraf said.

He said the annual rent at the restaurant was Dh160,000 in 2010, and that three years ago he spent Dh500,000 on refurbishing the 100-square-metre premises.

“I was even ready to pay Dh300,000 but the owner insisted on taking Dh600,000,” said Mr Ashraf, who runs two other restaurants in Mussaffah. “So I closed the restaurant.”

The building’s Emirati owner, Abu Salem, said: “Rents depend on demand and supply in the market.

“In Abu Dhabi city rents are going high, while out of the city they’re still down. It differs from place to place.”

Renters can either pay or leave the property, he said.

“I don’t want to quote a price now for this place as I am renovating it,” the owner said. “I might start my own business or rent it out. I’ll decide later.”

Last year, Mohammed Afzal closed his Electra Street furniture shop after 15 years and moved to Mussaffah after his landlord insisted on a 150 per cent rent rise.

“Before I paid Dh40,000 as annual rent but last year the owner demanded Dh100,000, so I shifted to Mussaffah,” Mr Afzal said. “In this poor-performing market even I can’t do that much business to pay off that huge rent.”

For a third year in a row, Sadik Kudirummal’s landlord had asked Dh20,000 more for rent on his shop. He paid Dh70,000 in 2014 and Dh90,000 last year.

He was also considering moving to Mussaffah.

Another business owner, who did not want to be identified, said his rent rose from Dh35,286 last year to Dh46,200.

“I wanted to move Mussaffah but stayed back due to high moving costs. But if rents rise further I will go to Mussaffah next renewal,” he said.

Matt Green, head of research at property company CBRE, said there were many reasons landlords put up their rents.

“At certain points of time landlords may decide to change the tenants or want different kinds of retailing,” he said. “Maybe they want more international brands in their buildings.”

Abu Dhabi’s rent cap was introduced in 2006 and was set at 5 per cent in 2010. It was scrapped in November 2013.