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September 20, 2018

Retailers on Palm Jumeirah’s Golden Mile in Dubai stuck in four-year limbo

 Dozens of retailers intending to open outlets on Dubai’s Palm Jumeirah have been left in limbo as a four-year legal row rumbles on.

Now many are hoping that a much-anticipated decision from the Dubai World Tribunal could breathe fresh life into an empty strip of ghost shops along the island’s Golden Mile.

Supermarkets and restaurants are among retailers that have been waiting years to move in to the Golden Mile development on the trunk of the artificial island.

The Golden Mile, a joint venture between Kuwait’s IFA Hotels and Resorts and Istithmar, was launched in 2005 to feature residential apartments as well as retail and office space.

But the development has become embroiled in a convoluted legal row that hinges on whether Nakheel ever committed to acquiring the retail space along the strip.

Palm Jumeirah’s master developer Nakheel brought a lawsuit against Souq Residences at the Dubai World Tribunal in 2010. Souq Residences is a joint venture between Kuwait’s IFA Hotels and Resorts and the Dubai World subsidiary Istithmar.

IFA began signing leases on the Golden Mile in 2011 and a spokeswoman confirmed it continues to sign agreements, with three more currently under negotiation.

Currently, 27 retailers are waiting to open. They include the supermarket chain Waitrose, Beyond the Beach, Starbucks, the restaurant Wagamama, Mothercare, Pinkberry, Boots, Party Zone, Loft Fifth Avenue, N Style and Drs Nicolas and Asp Medical and Dental. They signed contracts with Souq Residences.

But separate legal proceedings under way at the Dubai World Tribunal as well as the Dubai International Arbitration Centre need to be resolved before they can move in.

While the master developer Nakheel plans to build a major mall in the centre of the island as well as more retail outlets on The Pointe, The Palm has experienced little retail development since the first residents started to move into their homes more than seven years ago.

“People there are looking for cafes, restaurants, supermarkets and salons,” said Jacob Hrayki, who started Loft Fifth Avenue Salons in 2008. He signed a contract for the space two years ago.

Steven Holbrook, the chief executive at retailers Al Boom Marine, signed a lease around four years ago.

“We would love to get in and hope the issue would be resolved soon, but if not it will be a shame.”

He hopes to get his deposit back if he is unable to open an outlet on the island.

Dr Elhami Nicolas, the founder of Drs Nicolas & Asp medical centres, which has six branches in Dubai, has paid a month’s deposit for an office space at the Golden Mile.

“We have many patients on the Palm,,” Dr Nicolas said. “We are still interested, but we have been waiting too for [the project] to materialise.”

Nakheel has no contractual agreement with these retailers, said a spokeswoman, referring to tenants who had signed leases on the development. “We suggest they follow up with whoever they signed their leasing agreement.”

The US$27.21 million lawsuit was brought by Nakheel against Souq Residences. The master developer paid Souq Residences Dh100m in 2008. Nakheel claims the purchase was eventually aborted but it has not been compensated for the payment it made. A lawyer representing Souq Residences declined to comment.

The first dispute before Dubai World Tribunal concerns whether Nakheel agreed to purchase retail space from Souq Residences on the Golden Mile development. This hinges on whether a document signed by the pair in 2008 was a binding contract.

According to court documents and another proceeding initiated by Souq in 2010, the company claims that the two companies signed a contract.

Nakheel’s Dh100m payment was part of that plan and seeks the balance of the purchase price less the Dh100m.

Nakheel denies the claim, saying it provided the amount as funding for Souq Residences. A second dispute concerned Souq’s request for compliance certificate from the master developer for buildings 5 and 6 at the Golden Mile. Without it, Souq could not obtain building completion certificates for them – preventing the company from handing over units to buyers. A trial in February ruled against Nakheel and it was ordered to issue the compliance certificates. It did do so, and Souq is completing the sale of residential units in buildings 5 and 6 of the Golden Mile.

The parties to the Dubai World Tribunal are still awaiting judgement on the remaining issues.

ssahoo@thenational.ae

 

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Retailers on Palm Jumeirah’s Golden Mile in Dubai stuck in four-year limbo