Tenants in properties owned by Dubai Developments Group are set to benefit from an extended rental holiday after a Dh200 million relief package was announced by Dubai's Deputy Ruler and Minister of Finance, Sheikh Hamdan bin Rashid.
All business tenants in the company's properties will now be exempt from paying rent for six months, up from three months previously. The move is aimed at helping companies of all sizes tide through a tough economic period caused by the Covid-19 outbreak and the restrictions put in place to stop its spread.
Sheikh Hamdan's "generous" gesture reflects a desire to facilitate the recovery of the emirate's real estate market, Dubai Land Department's director-general Sultan Butti bin Mejren said in a statement on Monday.
The initiative "helps to consolidate the stability and consistency of the real estate market in the UAE, which has demonstrated strength and cohesiveness despite the prevailing conditions", Mr bin Mejren said.
Dubai Developments, previously known as Dubai International Real Estate, is the company behind the $1.1 billion (Dh4.4bn) Jewel of the Creek master development of 19 buildings at Port Saeed on Dubai's creekside. It also owns commercial buildings in the Satwa and Al Quoz areas of the city, the Baniyas and Blue Tower buildings facing Sheikh Zayed Road, a portfolio of about 6,000 apartments and the Roda Hotels and Resorts chain, according to its website.
An estimated 1,500 businesses will benefit from the extended rent exemption, according to Dubai Developments Group director-general Essa Al Maidoor.
"The rent exemptions will contribute to enhancing their investment and financial solidity of the businesses, the financial stability of their employees, numbering over 10,000, as well as the wellbeing of their families," he said.
The executive director of Dubai's Real Estate Regulatory Agency, Marwan bin Ghalita, said the stimulus and incentive packages offered in the UAE were contributing to "raising confidence in both public and private sectors".
The commercial office sector in Dubai faces a number of challenges, with the amount of space in the market set to grow 5 per cent to 9.18 million square metres by next year, according to a KPMG report issued last week. The Covid-19 outbreak also presents further long-term challenges, with demand for space likely to be weakened by companies deciding to allow more staff to work from home on a long-term basis.
"The market will likely see a fall in leasing activity as a result," the report said, with some companies already requesting reduced amounts of space and others looking for rent reductions as leases become due for renewal.
However, it also said "landlords, including entities owned by the Government of Dubai, have been proactive, engaging with tenants and offering short-term support".
"This will help to ensure tenant retention while long-term occupancy and income is protected," the report said.