It used to be a place to work but definitely not to play. The frenetic pace of construction around the Dubai International Financial Centre (DIFC) over the past five years has meant the sound of cement mixers and pneumatic drills has never been far away for the thousands of brokers, bankers and lawyers who populate it by day.
That is changing quickly as the cranes and scaffolds that have peppered the area for the past five years are replaced with completed apartment buildings and their residents, transforming the 44 hectare financial free zone from a nine-to-five workplace into a living community. Last week Liberty House, the first mixed office and apartment building to be delivered at the site, was officially launched by its developer ETA Star. It is only the second apartment building to be completed since the 450 flats in the 43-storey Sky Gardens were handed over to owners.
Next to Liberty House, two other buildings with flats are near completion, including the 86-storey Index tower by Union Properties, with 520 flats and 25 floors of offices. Firdaus Maniar, a senior risk consultant at the accountancy firm Horwath Mak, moved into Liberty House last year. Now his office is an lift ride away from his flat. "I was the only resident in the floor and everything around me looked dead when I moved in," says Mr Maniar. "I moved in because of the convenience. You know Dubai and how busy it is and how much time it takes to move around.
"Also the metro station that has just opened up right across the building, that massively improved our lives over here. It cuts down time and costs." The executive started working in the DIFC at the end of 2008 in the Gate Village, a precinct of the financial hub located behind the Arc de Triomphe-shaped Gate building. "At that time, the area was quiet and there was not much space available," Mr Maniar says. "The shops had not opened up completely and there was a lot of construction going on."
Down at the trendy Zuma restaurant, which Mr Maniar has adopted as his networking venue, the tables are bustling with the emirate's financial movers and shakers while the surrounding boutiques and galleries are also benefiting from the arrival of the DIFC's first residents. "During the week the majority of our clientèle are the business people from the DIFC," says Aleshree Guruparsald, the reservation supervisor of the restaurant that opened about a year ago. "But there is definitely much more activity now during weekends than before.
There is more activity in the whole DIFC too, says Ms Guruparsald, as art galleries and designer stores have opened. "That attracted guests too. There are always ladies coming in and asking around for Villa Moda," she says, adding that the weekend lunches now are so full that they recently started Friday brunches, which are "very successful". About 97 per cent of Liberty House has been sold its developers say, but it is only 60 per cent occupied. The restaurants and retail outlets on the ground floor of the L-shaped building have yet to open.
It will eventually be directly linked to the Gate building by a tunnel, while a 1.5km boulevard at the back of the building is still under construction. "I think that when all the buildings surrounding Liberty House will be ready, with the lake here, the tunnel going to the main gate, it will be a fantastic area," says Klaus Hoelscher, the managing director of the brokerage company Engel and Volkers.
Since it opened its doors, the DIFC has attracted about 700 firms with incentives that include 100 per cent foreign ownership, an independent regulatory environment and its own court system. "There is always going to be a lot of demand for property there," says Charles Neil, the chief executive of the brokerage firm Landmark Properties. Although the traditionally long waiting list for office space in DIFC has shrunk, demand for a prime location in Dubai is still strong among corporate occupiers as only 15 per cent of the total office stock in the city is considered Grade A space, suitable for blue-chip financial companies. Brokers count on the DIFC's continuing popularity with financial firms to help spur demand for the hundreds of new flats to be delivered there, despite the oversupply of homes elsewhere in the emirate. Its biggest rival is likely to be the neighbouring Downtown Burj Khalifa development around the world's tallest tower. "In regards to the construction going on, many people who come here and look at the place say I'd rather go to Downtown because it is more ready," says Mr Hoelscher. "But when this is all ready, there will be a melting of the two areas. It is basically the new central city location."
How have residential prices fared in the Dubai International Finance Centre (DIFC) compared to other areas of Dubai? Klaus Hoelcher, the managing director of the property brokerage Engel and Volkers, says the company has been adversely affected by the downturn. "Residential prices in Liberty House, the last project that was handed over, reached Dh4,000 (US$1,088) per square foot at the peak of the market in 2008. They are now available at an average of Dh1,900," he says. But this is still well above the average of Dh1,022 per sq ft in Dubai's freehold areas, according to the consultancy Colliers International. Have commercial prices held up at the DIFC? "At the very peak, prices reached up to Dh5,000 per sq ft. In the Index tower, we have even seen offers up to Dh6,000, which in my opinion was never realistic," says Mr Hoelcher. "Now offices in the DIFC are about Dh2,000 to Dh2,200 per sq ft in the area." Has the economic downturn affected the commercial market? Yes, says James Knowles, a director of the brokerage Asteco. He adds that there have been few office transactions in the past six months. . What are office rents like elsewhere in Dubai? Prime office spaces are being leased at an average of Dh230 per sq ft per year, brokers say. At Jumeirah Lake Towers, office rents are at Dh100 per sq ft, according to the property consultancy CB Richard Ellis. Office rents in the less popular locations of Dubai have declined by up to 60 per cent in the past year. But in the DIFC or neighbouring Emaar Square, rents have fallen by just 30 per cent.