Dubai International Financial Centre (DIFC), the emirate's financial free zone, aims to lease 90 per cent of units at its Dh1 billion (US$272 million) Gate Avenue retail development before it opens in 2018, to avoid creating a "ghost town", the official leading the project said.
DIFC is offering incentives and collaborating with tenants to meet their needs in a slow retail market, according to Nabil Al Kindi, chief real estate officer at DIFC.
“The leasing started a long time ago and our aim is to have a good percentage – almost 90 per cent – leased before we open, otherwise it will be a ghost town,” he said.
He declined to provide figures for what percentage of units had been leased to date.
Property owners in Dubai's retail sector are struggling to fill vacant outlets and are more willing to negotiate rents with existing tents amid increasing supply, according to a third quarter real estate report from broker JLL. Super-regional and regional malls have recorded drops ranging between 3 per cent to 5 per cent in headline rents on a quarterly basis, it added. The large volume of potential new supply will keep retail rents under pressure over the next 12 months, the broker said.
Under DIFC's original masterplan, Gate Avenue was expected to contain 224 retail units but Mr Al Kindi said some tenants are taking two to three units and knocking walls through to create bigger spaces. As a result, he is targeting 185 units with an average unit size of 2,000 square feet.
The main structure of the development is 95 per cent complete and will be finished in April 2018, Mr Al Kindi added. After that, occupiers will commence the fit-out of their units.
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DIFC is targeting a mix of local and international retailers and food & beverage operators.
He declined to reveal the pricing range for units but said it was “competitive”. “I don’t think we are overpricing. We want to work with tenants and we have a very low turnover rate in the main DIFC, which we want to [replicate].”
Spanning 660,000 square feet of built-up area and 880 metres in length, Gate Avenue will link the podium levels of all buildings in DIFC, from the Gate Building to the Central Park Towers.
On completion, the development will comprise a mix of dining, boutique, retail and entertainment options, as well as a mosque.
It is part of broader plans to expand DIFC and prepare for more companies to enter the free zone in the years ahead. Under its DIFC 2024 Strategy, the free zone aims to double the number of registered financial firms to 1,000 by 2024 from 362 in 2014. The joint venture between Investment Corporation of Dubai, the emirate's sovereign wealth fund, and Brookfield Property Partners, the real estate unit of Toronto-based Brookfield Asset, is building a $1 billion development within the DIFC district to cater to the future plans.