Savvy landlords are increasingly willing to listen to the concerns of Dubai’s F&B operators and negotiate favourable terms, according to Naim Maadad, the founder and chief executive of Gates Hospitality.
Gates Hospitality has a portfolio that includes restaurants such as Folly, Reform Social & Grill, Bistro des Arts, Asia de Cuba and Publique.
In an interview with Arabian Business, Maadad said that, in his experience, landlords are being “more than reasonable” with operators.
“In the last 12 to 24 months, it [rents] has come down,” he said. “The landlords are listening and do understand that we add benefit to their assets. We drive footfall to their buildings and help position them.
“The savvy ones who are committed and know what’s happening in the market have listened,” he added. “They’re being more than reasonable, on most occasions, in order to review their rent factors and put some measures in place to see how the markets are going to pan out.”
In the case of Gates Hospitality, he said some landlords have come to more favourable terms after a long period of negotiation.
“They didn’t agree to my terms and conditions from day one, but they’ve listened. There was a period of 12 months of negotiating, but a lot have come to the table and said they value what we add to the proposition. They’re looking at the next three years with us, and we respect that.”
Previously, a number of Dubai F&B operators have expressed concern that high rents have led to some concepts not surviving.
In January, for example, Samer Hamadeh, the founder and managing partner of Aegis Hospitality, a Dubai-based nightlife and restaurant management company, said that the industry faces a serious challenge from a minority of “short-sighted” landlords and “inexperienced operators who accept ridiculous terms.”
“High rents are a reflection of lack of experience, instead of being a reflection of something more logical, like guaranteed footfall,” he said. “New hotels, malls and locations with zero footfall charge rent based on ‘market rates’, which I find ludicrous in a developing market. Rents should be charged based on formulas and not ‘what the neighbours charge’.”
Conversely, Nabil Ramadhan, the CEO of Dubai Retail, told Arabian Business that restaurants with strong concepts and efficient business models need not be concerned with high rents from landlords in Dubai.
“Look at Dubai. It’s a very tough, competitive environment, but the concepts, whether international or home-grown, that are performing well have good operating models,” he said. “They are not complaining.”
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