Dubai Int’l Fi­nan­cial Cen­tre to cut rents to spur de­mand

The Pak Banker - - Company& -

DUBAI: Dubai In­ter­na­tional Fi­nan­cial Cen­ter, a tax-free busi­ness park, will cut rents and op­er­a­tional costs by as much as 50 per­cent to en­cour­age com­pa­nies to ex­pand fol­low­ing the fi­nan­cial cri­sis.

"We have bench­marked the pric­ing against other in­ter­na­tional busi­ness cen­ters," Ab­dulla Mo­hammed Al Awar, DIFC chief ex­ec­u­tive of­fi­cer, told re­porters on a con­fer­ence call in Dubai to­day. "We want to give clients in the DIFC the ben­e­fit of lower prices so they can grow their busi­nesses."

DIFC said it will amend rental charges for com­pa­nies op­er­at­ing in the cen­ter with ef­fect from Jan­uary.

Dubai set up DIFC in 2004 to at­tract in­ter­na­tional banks, as­set man­agers and in­sur­ers to help di­ver­sify its econ­omy. In­ter­na­tional banks such as Gold­man Sachs Group Inc. and Cit­i­group Inc. which have their re­gional of­fices in the DIFC, boosted their pres­ence in the Mid­dle East over the past five years as ris­ing oil wealth in­creased de­mand for fi­nan­cial ad­vice. Bahrain and Doha in Qatar have also set up fi­nan­cial dis­tricts to at­tract for­eign banks.

Com­mer­cial prices and rents in Dubai slumped 60 per­cent on av­er­age since the peak in mid-2008 as com­pa­nies aban­doned plans to ex­pand and ad­di­tional sup­ply hit the mar­ket.

The va­cancy rate of 40 per­cent will be ex­ac­er­bated by at least 20 mil­lion square feet (1.85 mil­lion square me­ters) of new space, equiv­a­lent to about 40 per­cent of Dubai's ex­ist­ing of­fice sup­ply, due to be added in the next four years, CB Richard El­lis Group Inc. said on Oct. 14.

DIFC, which houses many fi­nan­cial ser­vices com­pa­nies, com­mands the high­est com­mer­cial rates in Dubai. Some of these rents reached a peak of $200 (734 dirhams) per square foot, Al Awar said.

That is chang­ing as the high­est rents in DIFC will be in the Gate build­ing at 280 dirhams per square foot for an area of up to 2,499 square feet. The low­est rent for the same amount of space will be charged in the Gate Vil­lage at 235 dirhams a square foot, the DIFC state­ment said.

"We want to bring rents in line with the cur­rent mar­ket rate and give vis­i­bil­ity to our clients," the CEO said. "Some busi­nesses will re­ceive more than a 50 per­cent dis­count on rents," he added.

De­vel­op­ers are ex­pected to com­plete about 2 mil­lion square feet of space in the DIFC area over the next 18 months to two years, the state­ment said.

Cur­rently, DIFC-owned leasable build­ings are at full oc­cu­pancy, Al Awar said. One of three new build­ings owned by third party de­vel­op­ers is 70 per­cent oc­cu­pied, he said. Build­ings owned by third party de­vel­op­ers cur­rently make up about 35 per­cent of DIFC's of­fice space avail­able for rent.

In a sep­a­rate news item, Brook­field Of­fice Prop­er­ties paid $321.5 mil­lion for Her­itage Plaza, a 53-story sky­scraper in Hous­ton's down­town Sky­line District, in­creas­ing its pres­ence in Texas's biggest city.

The com­pany bought the 1.2 mil­lion-square-foot (111,000-square-me­ter) tower from God­dard In­vest­ment Group LLC. Brook­field, down­town Hous­ton's largest of­fice owner, now has 10 prop­er­ties to­tal­ing more than 10 mil­lion square feet in the city, the New York-based land­lord said in a state­ment yes­ter­day.

The sale demon­strates the at­trac­tive­ness of the sec­ondtier U.S. of­fice mar­kets as in­vestors drive up prices in cities such as New York and Washington, said Christo­pher Macke, se­nior real es­tate strate­gist at CoStar Group Inc., a Washington-based real es­tate data ser­vice. Prices in New York, Washington and San Fran­cisco were up 37 per­cent through Au­gust from their 2009 low, the MIT Cen­ter for Real Es­tate said in Oc­to­ber.

"Hous­ton is a log­i­cal sec­ondary mar­ket to look at be­cause of the high per­cent­age of in­dus­try re­lated to en­ergy," Macke said in a tele­phone in­ter­view. -Bloomberg

Newspapers in English

Newspapers from Pakistan

© PressReader. All rights reserved.