GF
On the face of it, today’s statement from the DIFC should be a reassuring sign that the emirate’s financial sector is in comparatively good shape – the number of registered companies (745) has remained largely constant over the last year and the vast majority (92%) of its leasable space is still occupied.
Reading between the lines though, it seems the financial centre has conceded that attracting new companies into the emirate has become decidedly more difficult, and instead it appears to be switching its focus to encouraging existing incumbents to expand.
Let’s not forget that the DIFC has been in a period of flux. The centre’s 400-strong staff base was hit by a second round of redundancies in June and the re-appointment of Marwan Lufti – one of the architects of the centre’s launch in 2004 – points to an organisation in a period of introspection.
The problem was never a mass exodus of companies from the DIFC, but that the sky-high cost of doing business (combined with deteriorating economic conditions) was encouraging banks already there to slim down their operations. The DIFC’s rents are notoriously uncompetitive – it’s the second most expensive office space in Europe and the Middle East, according to CBRE research.
Reality has hit home. The DIFC says that “extensive analysis and benchmarking of costs have been reviewed” and that it “plans to reduce the cost of doing business from the Centre and enhance client services, to encourage the future growth and expansion of its clients’ businesses”.
In terms of attracting new companies, the DIFC (much like many financial services firms) is targeting emerging markets, pointing to new registers from China, Malaysia, Turkey and the Indian sub-continent. Abdulla Al Awar, CEO of DIFC Authority said there was a “strong pipeline” of applications being processed.
Despite the clear intention of this statement to enhance the DIFC’s recently battered image, it still seems a decidedly meeker affair than the sentiment expressed earlier this year.
In a wide-ranging interview with the FT in June, Ahmed al-Tayer, governor of the DIFC, said he expected a 17% increase in clients in 2010, meaning the number of companies would swell to 905 next year.
There’s little evidence of this yet. Obviously, reducing the cost of doing business will go some way to making the DIFC more attractive, but so far this year the flow of new registers seems permanently set to dribble.
OK, do business in Dubai has been a bit challenging lately but life in Dubai is Incomparable!!
Better days will come and the city gets better every day… sun, sea and no taxes, wha else can someone ask?
DIFC still is an amazing place to work.