It has been 13 weeks since gyms across the UAE were forced to shut their doors to stem the spread of the coronavirus. Although gyms were permitted to welcome clients back – with strict restrictions in place – at the end of May, it seemed inevitable that some wouldn't reopen.
Facing months with no income from memberships, gyms turned to offering classes online for free, or for a fraction of their regular cost. But with running costs continuing to stay high for many, mounting bills have now proved too much for some.
Dubai Marina's TribeFit is 'closing for now' with options for members
When Dubai gyms reopened at the end of May, TribeFit put a message on Instagram, announcing that it would not be opening straight away.
"Following the government's announcement that gyms are allowed to open, we are taking time to ensure the healthy and safety protocols are met.
Members safety is our number one priority," the message read.
However, on Saturday, June 13, the TribeFit Members' Facebook page was updated with a letter that had been sent to customers.
"Unfortunately, we find ourselves in very difficult times due to the unexpected and extraordinary circumstances posed by Covid-19, the global pandemic," the post reads.
"We have tried all avenues to remain afloat in our existing premises, including restructuring and seeking relief from suppliers and most importantly, our existing landlord. Unfortunately, despite our best efforts we have not been able to secure critical support to enable us to ride out this crisis. It is very disappointing for us and indeed everyone, as we have been forced to make the painful decision to close our existing club."
Moving forward, the gym, which was located in Dubai Marina's Silverene Tower, has partnered with GymNation, so TribeFit's existing members can now use their facilities at gyms across the UAE.
TribeFit management say in the post that they plan to open a gym in Jumeirah Village Triangle by mid-October, "where the rent is much more affordable and in line with market conditions prevailing in this time of Covid-19".
Flywheel permanently closed
After eight years, Flywheel announced last month that it is closing its doors in Dubai permanently.
The company announced the news in an Instagram post, saying: "As the first boutique indoor cycling studio in Dubai, it is with a very heavy and sad heart that we have to say goodbye to Flywheel in Dubai.
"Unfortunately, the Covid-19 pandemic, the ensuing lockdown, Flywheel US’s closure, and the limited support for SMEs, has left us with no choice but to permanently close our doors."
Flywheel US announced in August last year that it was closing a quarter of its cycling studios as it focused on in-home fitness.
The brainchild of New York fitness entrepreneur Ruth Zukerman, and a huge hit in the US, Flywheel hit the UAE in late 2012 and steadily garnered fans at two Dubai locations ever since. It was widely credited with spearheading the boutique cycling craze in the UAE, a sector that now includes the likes of Crank in Alserkal Avenue, Cadence Theory and Motion cycling, both in Downtown Dubai.
However, earlier this year the company closed its Gold and Diamond Park location and moved its bikes into The Warehouse Gym, signalling that the boutique fitness movement had hit a few road bumps.
Flywheel Dubai clients can contact the company for a refund for any outstanding credits.
Cure.fit closes its doors
But Flywheel isn't the only gym that's found it too costly to weather the coronavirus storm. Earlier this month, India’s largest fitness chain, Cure.fit, which had only recently opened in Dubai, closed its doors.
"Given the current pandemic and restrictions across the globe, our business is going through significant changes," a spokesman said.
"This comes at a time when the lockdown has affected our business and we see this continuing for extended periods. Even after reopening the centres, social distancing norms would persist and we feel this will continue to have an adverse impact on the overall business."
Cult.fit opened in Palm Strip Mall in Jumeirah in June 2019, and in Dubai Media City in August. The same month, Mind.fit, a yoga and meditation studio, opened at the Shorooq Community Centre in Mirdif.
They signed for nine more locations after that, including Dubai Marina, Bur Dubai, Al Barsha and The Dubai Mall, and aimed to open 50 gyms in the UAE.
The holistic online healthcare platform had raised about $250 million (Dh918.2m) over four funding rounds since it started in 2016 in India and had set aside $10m to invest in the UAE market, marking its first international expansion.
That would have resulted in it competing with Fitness First, which has about 35 outlets in the UAE, and other major players such as Gold’s Gym. The UAE’s fitness market was worth Dh2 billion in 2017 and is projected to grow at a compound annual rate of 9.7 per cent to Dh3bn by 2022, according to a 2018 report by Ken Research.
The market is highly fragmented and boutique in the UAE, with more than 950 of the 1,040 fitness outlets independently run, rather than chains.
CrossFit GoldBox closed at beginning of lockdown
CrossFit GoldBox in Al Quoz was also forced to close permanently soon after the nationwide shutdown for gyms was announced.
The facility closed temporarily for two weeks in line with government regulations, and then on April 1, told its clients it would be closing for good.
"In these especially challenging times, it has unfortunately been decided that we shall not resume our business as usual," the company said in an Instagram post.
"Our decision to close has not been an easy one. We have truly enjoyed every moment of our journey together, members and staff alike."
The gym continued to offer online support and workouts until April 23.
An example of one of the many free fitness classes Dubai studios have been posting to IGTV, this one by Flywheel competitor Crank:
Ten tax points to be aware of in 2026
1. Domestic VAT refund amendments: request your refund within five years
If a business does not apply for the refund on time, they lose their credit.
2. E-invoicing in the UAE
Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption.
3. More tax audits
Tax authorities are increasingly using data already available across multiple filings to identify audit risks.
4. More beneficial VAT and excise tax penalty regime
Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.
5. Greater emphasis on statutory audit
There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.
6. Further transfer pricing enforcement
Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes.
7. Limited time periods for audits
Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion.
8. Pillar 2 implementation
Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.
9. Reduced compliance obligations for imported goods and services
Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations.
10. Substance and CbC reporting focus
Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity.
Contributed by Thomas Vanhee and Hend Rashwan, Aurifer
Petrarch: Everywhere a Wanderer
Christopher Celenza,
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What drives subscription retailing?
Once the domain of newspaper home deliveries, subscription model retailing has combined with e-commerce to permeate myriad products and services.
The concept has grown tremendously around the world and is forecast to thrive further, according to UnivDatos Market Insights’ report on recent and predicted trends in the sector.
The global subscription e-commerce market was valued at $13.2 billion (Dh48.5bn) in 2018. It is forecast to touch $478.2bn in 2025, and include the entertainment, fitness, food, cosmetics, baby care and fashion sectors.
The report says subscription-based services currently constitute “a small trend within e-commerce”. The US hosts almost 70 per cent of recurring plan firms, including leaders Dollar Shave Club, Hello Fresh and Netflix. Walmart and Sephora are among longer established retailers entering the space.
UnivDatos cites younger and affluent urbanites as prime subscription targets, with women currently the largest share of end-users.
That’s expected to remain unchanged until 2025, when women will represent a $246.6bn market share, owing to increasing numbers of start-ups targeting women.
Personal care and beauty occupy the largest chunk of the worldwide subscription e-commerce market, with changing lifestyles, work schedules, customisation and convenience among the chief future drivers.
Why it pays to compare
A comparison of sending Dh20,000 from the UAE using two different routes at the same time - the first direct from a UAE bank to a bank in Germany, and the second from the same UAE bank via an online platform to Germany - found key differences in cost and speed. The transfers were both initiated on January 30.
Route 1: bank transfer
The UAE bank charged Dh152.25 for the Dh20,000 transfer. On top of that, their exchange rate margin added a difference of around Dh415, compared with the mid-market rate.
Total cost: Dh567.25 - around 2.9 per cent of the total amount
Total received: €4,670.30
Route 2: online platform
The UAE bank’s charge for sending Dh20,000 to a UK dirham-denominated account was Dh2.10. The exchange rate margin cost was Dh60, plus a Dh12 fee.
Total cost: Dh74.10, around 0.4 per cent of the transaction
Total received: €4,756
The UAE bank transfer was far quicker – around two to three working days, while the online platform took around four to five days, but was considerably cheaper. In the online platform transfer, the funds were also exposed to currency risk during the period it took for them to arrive.
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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Tips for taking the metro
- set out well ahead of time
- make sure you have at least Dh15 on you Nol card, as there could be big queues for top-up machines
- enter the right cabin. The train may be too busy to move between carriages once you're on
- don't carry too much luggage and tuck it under a seat to make room for fellow passengers
