Jebel Ali a mountain of work

Downtown Jebel Ali, tagged on the project's website as "big-city buzz, small-town charm", is a crucial component of Dubai's development plans.

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Ingemar Mellgren is pleased with his company's new home. The chief financial officer of Ericsson, the Swedish telecommunications company, and 220 of his staff have taken up tenancy on the 14th floor at one of the four blocks that make up The Galleries in Downtown Jebel Ali. Ericsson is one of the first four companies to move into The Galleries, the first completed part of the Dh70 billion (US$19.05bn) business and residential hub being developed by the Dubai World-owned Limitless.

The offices are bright and spacious, while the beige-coloured furniture complements the firm's corporate image, says Mr Mellgren. Its location on Sheikh Zayed Road, just 45 minutes from both Dubai and Abu Dhabi airports, and the link-up to Dubai Metro in September make it the ideal place to work. Al Maktoum International Airport, Dubai's second airport that will open at Jebel Ali by next year, will also be convenient for those living and working at Downtown Jebel Ali, a town that will stretch across 11km of otherwise deserted land.

"We know we are a bit early here," says Mr Mellgren. "There is some discomfort in the sense that it's not ready. Food courts are supposed to come, some domestic services are not yet in place and it's still a bit of a construction site, which gives us certain inconveniences with access roads. "But when the metro line comes in September, then it will be an ideal location." At a time when most companies are limiting expansion, causing demand for office space in Dubai to drop and supply to be curtailed over the next few years, Ericsson has taken on a 10-year lease at The Galleries.

The market is providing companies that see the emirate as a long-term hub for their business operations with the opportunity to secure prime space at competitive rents, while landlords are open to negotiating deals and offering incentives to secure tenancies. This is in stark contrast to this time last year, when high rents and a lack of quality offices prompted some firms to look towards other countries in the region as a base.

"We were questioning if we could have a regional centre in the UAE with the cost level as it was," said Mr Mellgren. "But we have a long-term view and we have been able to find something that is reasonable, and with a property owner that also has a long-term view." Downtown Jebel Ali, tagged on the project's website as "big-city buzz, small-town charm", is a crucial component of Dubai's development plans.

It was launched in late 2006, with construction beginning in 2007. Each of the four zones will have a "central plaza" of shops and hotels, along with office and apartment buildings. There will also be a light-rail service connecting each of the zones, while three metro stations will eventually be built. An amphitheatre will also be built to entertain residents and attract visitors. The developer envisages an eventual population of 200,000.

Despite the slowdown, construction on the first zone is, so far, progressing relatively smoothly. "With the way we're planning and delivering this project, we want it to be unique. We don't want to be just like any other standard community or project," says Salah Ameen, the project director of Downtown Jebel Ali. "We are even being careful when it comes to the finishings of the project, such as using granite, and with the landscape and the walkways. We want people to enjoy being there on a daily basis, not only for people working and living there. The project will really serve the area, which we call the 'new parts' of Dubai."

While Limitless has secured some tenancies at The Galleries from blue-chip companies, some of which have bought staff accommodation in the nearly finished neighbouring residential buildings, times are challenging for the development as a whole. With infrastructure work nearing completion, the company's main task now is assisting the 75 or so sub-developers that will be building across more than 300 plots of land.

"We need to turn any stones that are facing us in order to deliver this project," said Mr Ameen. "We are talking with those who are having problems with payments and revisiting their payment structure and schedule, and are trying to come up with something that is mutually workable. We are part of the UAE as a master developer and everybody is facing the same problem, but we are handling it case by case."

Some sub-developers have adapted designs to suit market conditions, such as reducing the size of planned apartments, in order to make their projects more sellable, a move that Limitless is accommodating. "We've been seeing changes in the designs of buildings. Previously there were a lot of apartments with three and four bedrooms, whereas now developers are going more for two bedrooms," says Mr Ameen.

"I would say this is natural when the economy has slowed down, as developers don't want to overspend. We sold the land, but it's up to the ones developing the plots to know what to offer their customers. "But we do have a limitation on each design. For example, we can't have every developer going for studio apartments. We also have to consider any impact the changes might have on traffic and utilities."

Unlike the huge developments planned on Dubai's desert outskirts, it is the location of Downtown Jebel Ali that will help the town, and those building within it, weather the slowdown and stand the test of time, according to property experts. The convenience of the nearby transport networks, such as Dubai Metro and the future Al Maktoum International airport, will also attract long-term demand from businesses and residents.

It is also cheaper to rent an office at Downtown Jebel Ali than it is at Downtown Burj Dubai, another township project by Emaar Properties, and Business Bay, a development by Dubai Properties in central Dubai. "In the long-term, it will emerge as a strategic location in the southern part of Dubai moving towards Abu Dhabi, while in the short-term it will attract companies looking for cost-effective space," says Craig Plumb, the head of research for the MENA region at Jones Lang LaSalle.

"Because of the location, the development will also attract companies from the manufacturing and industrial sectors." It is also the demand of those working in the industrial areas close to the development, such as Jebel Ali Free Zone and Dubai Investment Park, that will help sustain its residential component in the long-term, says Ronald Hinchey, the resident partner at Cluttons, a property consultant..

"These zones are huge in terms of companies based there, land mass and people working on site," he says. "So it's logical to develop a stock of residential units nearby. Since the 1970s, Dubai has focused on developing its industrial base, and regardless of the credit crunch, that is not going to go away."