By Edward Attwood
New rates will run from AED160 to AED280 per square foot, ranked by office size and location
Dubai International Finance Centre (DIFC), the tax-free business park for financial services companies, has announced a new ‘matrix’ of rents that could see rates for some firms drop by as much as 50 percent.
Effective from January, the rents will run from AED160 to AED280 per square foot, depending on the size of the office and its location within DIFC.
Officials at the DIFC Authority told reporters in Dubai on Sunday that they were reluctant to give an official range for the drop in rents, as it varied from client to client.
“It is difficult to assess the difference because the methodology in terms of implementing the rates is different. We are using a matrix system that varies in terms of location, building and size, whereas before it used to be a rate across the board,” said Abdulla Al Awar, CEO of the DIFC Authority.
“These rates will be applied to new as well as existing companies so everyone can benefit from the new rent matrix, and we’re not creating an environment where it will be beneficial for just a specific group or set of clients.”
“If we look at the entire leases currently in DIFC, then we can give a percentage view [of the drop]. But the problem is that would not be fair statement to all of the clients, because some can have an up to 50 percent discount,” added Marwan Ahmad Lutfi, deputy CEO and head of business development at DIFC Authority.
“If you look at certain times when the markets were booming in 2008 and 2007, you’re talking almost approximately $200 a square foot of rents.
“Given the financial crisis and the global migration of staff from one centre to another, we need to make sure that the environment is comfortable for companies to plan their growth."
Al Awar said that around 95 percent of the property in the DIFC was occupied, excluding the recently opened penthouses in Gate Village.
In the last four months, 35 companies have set up shop in the area, bringing the total of firms based in the DIFC to 780.
Good going Abdulla. This is the way it has to move and you have taken a brave stand. Hopefully other freezones will watch and learn from your leadership in time of distress.
A wise decision made, albeit a little late
â€œGiven the financial crisis and the global migration of staff from one centre to another, we need to make sure that the environment is comfortable for companies to plan their growth."
Please translate the above statement in an honest phrase. "The financial crisis has left many milions of sqf empty and in order to get some interest back we need to drop drastically our rents"
The rents are being slashed because there is insufficient demand for the existing let alone pipeline supply. Dubai as a financial centre has failed mainly because of investor insecurity and mistrust - purely the result of a lack of transparency, and as long they don't get this, failure is guaranteed. Bahrain is once again becoming the only trusted financial centre for the region.
It is the only way to retain or bring business back, cheap is massively attractive right now, recovery is a slowly, slowly process and remember recovery is barely underway across Europe and North America with a substantial number of issues still oustanding. I believe the same reduction ratio should be applied across the other free zones and see the difference
"around 95 percent of the property in the DIFC was occupied" and they still wanna drop the rents?.. doesn't add up.
Can any readers educate us on how these prices compare to: The City of London, New York, Tokyo, Singapore, Hong Kong etc?? Would be interesting to learn where Dubai now stands compared to other financial centres. Thanks
A welcome move - but probably a little too late. DIFC is going to come up against some serious competition from the QFC in Doha in the coming years - it's probably going to take a little more than this to stave of the competition; given all the investment that is going to take place in Doha in the next 12 years.
I wish this decision could be attributed to visionary and proactive business friendly decision making .......
Unfortunately like most decisions in this part of the world, it's NOT.........The only reason this has happened is because of the overwhelming number of tenants making it clear they were going to leave a small cubby hole rep office in DIFC and move the rest of the operation to cheaper premises outside!!!
Ajman Free Zone, please take note