New rents benchmarked against global financial centres
The Dubai International Financial Centre (DIFC) has launched a new pricing “matrix” that will slash office rentals by up to 50 per cent in a bid to boost the centre’s growth.
Effective from January 2011, the new rent metrics range between AED160 ($44) a square foot and AED280 a sq ft, depending on the size of the office and its location within the DIFC.
“It is difficult to assess the difference in price because we are using a matrix system that varies in terms of size and location, whereas it used to be a single rate across the board,” says Marwan Lutfi, deputy chief executive officer and head of business development at the DIFC Authority (DIFCA).
“But if you look at certain times when the markets were booming in 2008 and 2007, you’re talking about approximately $200 a sq ft for rents.”
Today, there are 780 companies operating out of the DIFC. The new rates will be applied to both existing and new clients and will offer lower rates to companies leasing more space, thereby encouraging businesses to expand within the centre.
For example, a company leasing 20,000 sq ft or more in the Gate Village will pay AED160 a sq ft, while those leasing less than 2,500 sq ft will pay AED235 a sq ft.
The revised pricing structure also hopes to encourage more companies to establish or relocate their Middle East, Asia and Africa operations to the DIFC.
“Only 33 per cent of companies serving the region are currently based here,” says Abdulla Al-Awar, chief executive officer of the DIFCA.
“The new pricing structure is benchmarked against other global financial centres to ensure we remain cost-competitive.”
The new pricing matrix is part of the DIFC’s new five-year strategy, which it announced in May 2010.
“We have taken into consideration the importance of long-term visibility of operating costs to both sustain clients and help them plan efficiently for their continuous growth,” says Lutfi. “You can’t plan expansion with uncertainties.”
In addition to lowering its office rentals, the DIFC has also revised its operational fees by reducing parking costs and stripping out some of the other fees that companies paid the DIFCA.
In July 2010, the DIFC said it was reviewing its retail strategy following the closure of stores within the centre.
At the end of August 2010, the DIFC had a total retail space of 211,966 sq ft, 66 per cent of which was occupied.