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Up until 2004, the area where the Dubai International Financial Centre (DIFC) is located was just a patch of desert. From humble beginnings, DIFC has grown to house hundreds of companies, from banks to insurance firms to restaurants. It survived the trauma of the global financial crisis and is now looking at new territories for future growth. In the early days, its tenants came from the US and Europe; now they come from Asia and Africa too.
Amid these changes, the management team at DIFC felt the time was right to reevaluate the master plan of the 110-acre plot, and a new plan would be drawn up with a new unit formed to manage the centre’s properties, both existing and envisaged.
Brett Schafer, whose previous experience includes developing Dubai Festival City, joined as CEO of the new unit, DIFC Properties.
First year a success
Last year was the first full year of operation for DIFC Properties. The centre increased the number of active licensed companies by 18 per cent — a bigger rise than in any year apart from 2008. By the end of last year, there were 1,225 active licensed companies, including branches of 21 of the world’s top 25 banks, seven of the top ten insurance companies and nine of the top ten law firms.
Occupancy rates in properties managed directly by DIFC, which includes the Gate Building, Gate Precinct and Gate Village, were nearly 100 per cent.
Schafer was justifiably pleased with the results. But the centre is not stopping. It plans to build more office space, more rooms for shops and it wants to increase its cultural offerings through a partnership with the Barbican Centre in London. The reason for the expansion is simple: DIFC expects plenty of new tenants.
“Our ten-year plan is aggressive, [aiming] to triple the number of companies in the centre,” says Schafer. “On the property side, we’ve got to be sure we can accommodate that. We have some stock in the new buildings in the master plan, but with the take-up rate as it is, it won’t be long before these are full.
“And the lead time for a major office building is two to three years. In four or five years we might not have much space.”
Of the three projects approved last year, one stands out: a retail spine that will connect DIFC’s podiums. The project is expected to cost Dh475 million. The centre has already built the tunnels that will provide services to the plots and will soon build the two levels on top: an air-conditioned concourse that connects the podiums to the shopping space and an outdoor promenade to join all the buildings in the master plan.
Schafer says the promenade will create “an landscaped outdoor [area] with interesting features and furniture” and will be a place for people to hang out.
Schafer expects construction of the retail spine to be completed by early 2017. More details of the project are expected soon.
The retail spine is a reminder that, despite its name, DIFC is about much more than finance. Indeed, the centre’s results for 2014 show that only a third of the companies registered there are financial firms.
The remainder are from industries such as support services, which include law firms, and consumer services such as hairdressers, tailors and newsagents. There are so many restaurants and cafés that some jokingly call DIFC the Dubai International Food Court. Does this imply the centre has diverged from its goal of being a top-class financial district?
“Let me use the analogy of Canary Wharf in London,” says Schafer. “They have all sorts of activities there. Here at DIFC, 60 per cent of the master plan is offices but we have hotels, residential and retail space as well.
“We are positioning ourselves as an interesting and dynamic district. DIFC has always been a sponsor of art and culture and we will continue to do that through our relationship with Barbican and our plans to organise a Barbican week.”
Another foreign location that Schafer sees as an inspiration for the DIFC is the PATH complex in Toronto, an underground walkway system that links 30km of shopping, services and entertainment. He describes the development as a “great, interesting environment”, which DIFC may emulate with its new retail spine.
Shops and restaurants, therefore, are not simply add-ons but integral to the district. And despite the preponderance of retail space in Dubai, Schafer believes DIFC can offer something different. There are many residential buildings on Shaikh Zayed Road, for instance, where there are relatively few amenities. He suggests that DIFC could be a convenient shopping location for these residents.
True to office roots
Of course, there are office projects under way too. The centre is constructing new offices next to the Standard Chartered building in Gate Village at a cost of Dh205 million. The new structure will have a presence on the boulevard facing Emirates Towers. At 200,000 sq ft, it is not a huge building by Dubai standards, but it is “significant because the Gate district is a popular, fully leased part of our area”, he says. The building is expected to be finished by early 2017 and Schafer says there is already a waiting list of tenants.
The Investment Corporation of Dubai and Brookfield, the international property developer, are developing another major office complex in DIFC. The building is planned to be 55 storeys with 1.5 million sq ft of office space. It will be next to Al Fattan Currency House. The project is in the design stage and will be announced formally soon.
These projects should help the DIFC increase its office space, which it has strived to do in recent years. Last year, the centre increased its commercial office space by 15 per cent, equivalent to the entire capacity of the Gate Building.
Schafer believes these developments will help the centre continue to offer a variety of options for potential tenants.
“There are different price points throughout the master plan — we have spaces with different floor plans [and] a nice variety.”
All these factors should help DIFC continue to attract clients, which may not all be the typical banks, insurance firms and money managers that one might expect.
For instance, telecom firm MTN Group manages its investments from the centre, says Schafer. Also, the Four Seasons hotel chain has its regional headquarters at DIFC. “That used to be in Switzerland,” he says. “They moved it from Geneva to Dubai because Dubai has good connectivity.”
Source: George Mitton, Special to Property Weekly