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UAE Freezones Biz News Updates
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Dubai World Central in investment surge
 A
media tour to learn about the latest developments and updates of Dubai World
Central
Multinationals line up to take up space alongside aviation and logistics
firms
The Dubai World Central is starting to get a lot of traction and it is not
just confined to airlines launching flights from the emirate’s new aviation
hub.
The master-development is garnering attention for its commercial space, with
multinationals making a beeline for prime space there, according to a new
report on Dubai’s commercial realty prospects by Knight Frank. “With the
Dubai World Central HQ building now near full occupancy, including global
FMCG corporations such as Nestle, occupiers are starting to consider
available space within the surrounding business park buildings,” the report
noted.
And as the countdown nears for the Expo 2020 host city announcement next
month, “Investors, developers and occupiers are beginning to look at Dubai
World Central as a potential hub of activity,” the report said.
Also, “With Dubai Airports’ CEO Paul Griffiths recently raising questions
over the long-term future of the existing Dubai International Airport, Dubai
World Central is well placed to benefit from the potential shift in activity
southwards.”
It is not that all of the pull for corporate tenants in Dubai are headed
towards DWC. Office properties in existing commercial hubs are feeling the
benefits of all-round improvement in tenant demand. Sure, the multiple
strata ownership remains an issue, but even here the Knight Frank report
suggests clear demarcations are starting to appear.
“While corporate occupiers continue to consider strata title buildings, the
associated complexities mean that they prefer those that are solely owned,”
the report said. “Smaller, start-up occupiers, however, see strata
accommodation as a viable and cost-effective option.”
New clusters are also being created to help out the small-occupier tenant
base. In Business Bay, the recently launched Dubai Design District is
starting to take shape as a future commercial destination, for aspiring
fashion mavens and those who have just set out to make a name for
themselves.
And if anyone needed confirmation that real estate is and will remain a
waiting game, the Knight Frank report duly points out: “Developers who have
persisted and delivered high-end projects in established business districts
are now looking to capitalise on current and future occupier demand.”
Does all this mean that Dubai’s commercial realty is finally ready to play
catch up with the residential?
“Empirically speaking, commercial prices always tend to follow residential
real estate prices with a lag,” said Sameer Lakhani, managing director of
Global Capital Partners, a consultancy. “This relationship has been observed
in developed markets as well. In the US and UK, the lag has been 12 to 18
months.
“The surge in residential real estate prices clearly implies that commercial
prices are expected to follow, and we have already started to witness this,
particularly in the free zone area of JLT. Quite clearly, the commercial
segment was witnessing a larger overhang in supply in Dubai, and we see that
supply is now being absorbed; as reflected in steadily higher occupancy
rates over the last 12 months.”
According to Lakhani, areas like JLT have witnessed a near 50 per cent
increase in occupancy rates, a process accelerated by the creation of more
small and mid-sized businesses.
In Dubai, the development of free zones have been pivotal in harbouring an
influx of new businesses in the region, as reflected in the superior growth
rates of business formation as compared to onshore Dubai,” Lakhani said.
“The DMCC free zone is now the largest such in the UAE with a 50 per cent
year-on-year growth, as compared to 15 per cent in DED (Department of
Economic Development) areas.”
Oct 24, 2013 |
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Courtesy Al Nisr Publishing LLC
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