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Dubai's Dragon Mart 2 shops feel the pinch

Dubai - Nakheel in talks to resolve issues.

Some retailers from Dragon Mart 2 in Dubai say they are feeling the pinch as business has not picked up as expected. They claim the direct entrance to the mall from Road 44 remains incomplete, which is putting many shoppers off.
A clothes retailer from the Dh1 billion mall told Khaleej Times that more than 200 shops shut down business temporarily on July 30 due to ongoing dealings with Nakheel - the developer and owner of the mall.
However, Nakheel disputed these claims (see full statement) and regretted "this non-contractual behaviour by a small number of tenants". Nakheel said it was providing rental and promotional support to the retailers.
The clothes trader said 208 retailers had set up a group on an instant messaging service to update each other about developments. "I own around 10 stores across Dubai, each taking in sales of around Dh100,000 a month, but my store in Dragon Mart 2 makes only Dh15,000 on average, a month."
Comprising 570 shops, 520 booths, and a car park that can accommodate 4,500 cars, Dragon Mart 2 is the second phase of Dragon Mart 1 - the largest Chinese trading hub outside mainland China.
A firm favourite with residents and shop-owners alike, Dragon Mart 1 has built a strong reputation among the Dubai community since opening in 2004.
But its second phase, located on the Hatta-Oman highway, is not quite ready yet, retailers said.
Although the mall was officially opened less than six months ago, the storeowner said he has been operating his store since December 2015. As per his contract, he submitted 12 post-dated rental cheques more than a year ago, under the assumption that business would match that of Dragon Mart 1.
"Nakheel commenced our rental cheques from December 2015. I had to submit three years worth of cheques, with each cheque totalling Dh125,000."
But the reality of business is quite the contrary, he told Khaleej Times. "The shops are struggling to make ends meet. As a result, many retailers are struggling to honour the previously submitted cheques."
At a cost of Dh220 per square foot, he is paying "a considerably higher rent rate" for his 1,700 square feet retail space, compared to his other Dubai stores, he said.
"We keep appealing to Nakheel to find a solution to the problem. Many of us want them to decrease the rent rate because of the small footfalls."
Business as usual
When Khaleej Times visited the mall, some of the stores appeared closed, however, it was evident that many shops were still running business as usual.
A second retailer, who has been in Dubai for five years, said he booked a shop in Dragon Mart 2 three years ago when the project was first introduced to him.
With friends owning stores in Dragon Mart 1 and business booming, he jumped at the idea.
Investing Dh1.3 million in his business (which trades in Chinese products), the Chinese businessman said he has spent his "last single cents" on the shop.
"The mall was originally set to open in October 2014, but that got pushed back. It was then meant to open at the beginning of 2015, but it didn't. We only started operating at the end of 2015."
But even then, he said the exterior of the building was still "incomplete", including the parking areas. It has since been completed though.
However, the biggest concern of many retailers is the logistics of the mall - namely the incomplete entrance point from Road 44.
Since the initial closing of some shops on July 30, a number of them have resumed business, but some remain closed, according to the retailers Khaleej Times spoke to.
Nakheel offers full support to retailers
"Ninety-five per cent of the leased area at Dragon Mart 2 is open and performing well, and will continue to do so as footfall grows. We are surprised by this non-contractual behaviour by a small number of tenants, with whom we are liaising directly to resolve the matter.
"Nakheel provides ongoing sup-port to Dragon Mart 2's shops, restaurants and entertainment outlets in a number of ways including fixed-rate leasing contracts - meaning no increases for three years - as well as flexible payment plans.
We also provide extensive marketing support - free of charge to tenants - through multi-million dirham promotional activities and events, including aggressive newspaper, radio and social media campaigns and events within the mall. In addition, we participate in Government initiatives such as the current DSS festival.
"Dragon Mart 1 is a fully-established trading hub that has been in operation for 12 years. Dragon Mart 2 is a completely different offering, designed to complement and enhance the original complex. It is less than six months since Dragon Mart 2 officially opened, yet footfall there has already reached more than 36,000 at peak times, and continues to rise." - (As sent to KT by Nakheel)
What shoppers say...
Product choice and accessibility seem to be the biggest pull for visitors to Dragon Mart. One shopper said though the products on offer at Mart 2 are of "higher quality" to that of its sister mall, she prefers to shop at Mart 1.
"The products on offer at Mart 1 are cheaper and I am more familiar with the layout. If I was looking to shop for higher end products, then maybe I would head over to Dragon Mart 2."
A second shopper also said convenience plays a big part in his hesitancy to visit the Dragon Mart 2.
"I visit this Dragon Mart often and find that business is good in Mart 1. I have also checked out Mart 2. You need to drive past Mart 1 to reach there, so the tendency is to go to the first one."He said even though Mart 2 has an impressive architecture, people often choose to go to the common man's mall - Mart 1.
"But a direct opening to Mart 2 from Hatta Road might help solve its footfall issue."
Give it more time, say retailers
Two retailers Khaleej Times spoke to said although business is "quieter" at Dragon Mart 2, the footfall increases during the weekends. One retailer said: "I own a store in Dragon Mart 1. Business is good there. My store in Dragon Mart 2 is less busy, but hopefully things will pick up over time.
"Weekends prove best for me as I have more customers."
An electronics store owner agreed. "We are open every day, but weekends are when we see the majority of our customers."
kelly@khaleejtimes.com