The establishment of the Dubai World Trade Centre (DWTC) as a free zone could draw interest from international investors looking to plough money into a prime property location in the emirate, analysts said. Last week’s decree to transform the exhibition area into a free zone will help to revive international interest in a property market that is cooling down.
“What this means for the property market is that there is added confidence in the sustainability of the rate of growth in real estate and the increasing prices,” said Sallie Bowtell, a Dubai-based partner at the law firm Trowers & Hamlins.
“It is not of itself sufficient to offset the continued impacts of speculation on the market, but it is a positive step towards generating and retaining genuine foundations behind the property market.”
A newly formed body called the Dubai World Trade Centre Authority (DWTCA) will oversee the new free zone, which will also include the upcoming World Trade Centre in Jebel Ali, according to the decree published on the state new agency Wam.
Dubai World Trade Centre last year recorded 10 per cent year-on-year growth in visitor numbers to deliver a new high of 2.4 million.
With 93 exhibitions – delivering on average 23,000 visitors per event – the venue also recorded a substantial increase in the mid-sized exhibition segment, signalling strong future growth potential, it said.
The DWTC’s location next to prime property in Downtown Dubai and close to free zones like the Dubai International Financial Centre (DIFC) will make it all the more attractive to investors. Occupancy in prime office property tends to be high in Dubai and could go up to nearly 100 per cent in some areas, brokers said.
“If anything is made available I expect we will probably see, depending on the pricing, large global multinational funds, maybe pension funds for instance,” said Faisal Durrani, international research and business development manager at the property broker Cluttons.
“They are quite interested in that stock because the prime office market has been pretty resilient and continues to perform well and most of the demand we are seeing is skewed towards the prime end of the market.”
Prime office rents stabilised in the first quarter of this year after rising 14 per cent last year, according to Cluttons.
The supply of prime office space in free zones remains limited, helping prices to hold on to last year’s levels.
Unlike the residential market, which is expected to decline by 10 per cent this year according to the real estate broker JLL, the commercial property market is buoyed by continued expansion of businesses in Dubai.
“The new authority may be better able to facilitate business set-ups and lettings to attract new tenants/occupiers and streamlined procedures should help make it a more attractive destination, especially for those businesses and users that the new free zone is setting out to encourage,” said David Nunn, a partner at the law firm Berwin Leighton Paisner.
From a legal standpoint, the DWTC free zone will have a special status, according to JLL.
“The creation of the new free zone will allow DWTC to offer ‘dual licences’, whereby they will be able to attract both onshore and offshore licensed companies,” said Craig Plumb, the head of research at JLL Mena.
“The only project in Central Dubai that is currently able to do this is Tecom’s Dubai Design District [DDD], and the new regulations will allow projects in the DWTC to compete more effectively with DDD.”
The first phase of DDD, or d3, cost Dh4 billion and when complete will include a fashion, design, and luxury goods district, as well as residential, commercial and hospitality space.
“There are huge waiting lists in these areas,” said Mr Durrani.
Another key attraction is the single ownership of property in DWTC, which has been problematic for districts such as Business Bay, where multi-ownership in buildings has dissuaded international occupiers from moving in.
“The advantage that DWTC will offer is that all of the stock will be owned by the Investment Corporation of Dubai, so you will have a single landlord, which means it will be attractive to all the large global multinational companies that are unable to find space in somewhere like the DIFC which is next door,” said Mr Durrani.
dalsaadi@thenational.ae
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