DIFC announces strong growth in its core businesses in 2010



The Dubai International Financial Centre (DIFC), the financial and business gateway between the Middle East, Africa and South Asia region (MEASA) and the world, today updates the market on its successful performance in 2010 to date.

Highlights

  • The overall number of active registered companies operating from the DIFC has remained constant at 745, despite the downturn.
  • New companies registered from emerging markets such as China, Malaysia and Indian subcontinent.
  • Major international financial institutions are expanding their regional footprint using the DIFC platform.
  • Continued development of internationally recognised regulations with introduction of new changes to the DIFC's Collective Investment Funds.
  • Total available area, including third party developers, is 2,116,311 square feet of office space.
  • An annualized growth rate of 20% in terms of additional office space leased in DIFC.
  • Occupancy of the DIFC's Gate District (Gate Building, Gate Precinct and Gate Village) remains high at 92% of the leasable space.
  • Completion of DIFC's Business Strategy review in preparation for the next phase of the Centre's long term growth.
  • Cost of doing business to be reduced to encourage the growth of businesses based in the DIFC.

H.E. Ahmed Humaid Al Tayer, Governor of the DIFC said:
"Since its inception in 2004, the DIFC has grown to become one of the world's top international financial centres connecting the MEASA region and the world. Today, the DIFC with its modern infrastructure, free zone status and self governing laws and courts, is globally recognised as the pre-eminent and favoured financial centre in the region. These facets enable the DIFC to make a major contribution to the UAE economy.

"While the DIFC continues to evolve, we have achieved a very encouraging performance so far this year, especially in light of the global economic backdrop of the last two years. The MEASA region has significant economic advantages from its commodity-based economies, its geographical position and the depth of its talent pool. As the recovery continues to take hold, these factors will once again act as catalysts for the future economic growth of the region and the DIFC".

Recently, the multiple achievements of the DIFC were recognised by the 2010 Global Financial Centres Index 7, where Dubai has continued its ascent and is featured among the world's top 25 international financial centres. At the same time, and for the 7th time in a row, Dubai maintained its undisputed status as the leading financial centre between Europe, Singapore and Hong Kong.

Abdulla Al Awar, CEO of DIFC Authority said:
"Within five years of launching, the DIFC has achieved what it was established for as an international financial centre for the region. We are now embarking on a new phase of growth and continue to act as a gateway between the MEASA region and the world's capital markets. Our focus is to expand and grow our existing client partnerships. We will continue to attract new companies to the Centre, as evidenced by the strong pipeline of companies and applications currently being processed. We will also continue to develop the DIFC's legal and regulatory framework and its physical infrastructure to enhance the support the DIFC provides for the economic growth of the region."

Operating Review

Despite the global economic challenges, the DIFC continues to grow steadily as one of the world's established financial centres. The DIFC community comprises of 745 active registered companies, with 297 regulated and 374 non-regulated companies, and 74 retailers. Currently, 16 of the world's top 20 banksNote1 have established a presence at the DIFC; meanwhile 8 of the world's largest asset managers Note2 and 4 of the 5 world's largest insurersNote3 are also based at the DIFC.

DIFC's global stature is further evidenced by the geographical diversity of firms operating out of the Centre with approximately 40% of the regulated firms coming from different parts of MEASA; 42% from across Europe; and 18% from the US and rest of the world.

During the first six months of 2010, the number of companies registered in the DIFC remained constant despite the economic downturn. While a small number of firms have withdrawn over the period from the Centre, a significant number of firms from across the world continued to join including first time entrants into the region Note4.

The DIFC witnessed an increased interest from companies based in MEASA, part of which demonstrates a growing trend of Asian and Indian companies looking to Dubai as the gateway into the Middle East and Africa region. This trend was reflected in the new registrations granted during the first half of 2010.

The DIFC saw a growth in the breadth and depth of financial activity due to the diverse services offered by the 297 active regulated firms Note5.

Since the beginning of 2010, the DIFC has witnessed the growth of a number of existing clients who increased their presence and deployed more resources into the region. This includes a major international financial institution that made the DIFC the regional headquarters of its private banking business, four financial institutions that upgraded their DIFC licences to widen their range of services to the region, and three major international financial institutions who expanded their existing regional businesses managed from the DIFC to include their interests in Africa.

Soft Infrastructure Development

The DIFC continues to build on its internationally recognised regulatory framework and legal system in order to support the growth of financial services and commercial activities.

In July 2010, the Dubai Financial Services Authority (DFSA) introduced a series of regulatory changes to the DIFC's Collective Investment Funds regime in order to make the DIFC a more attractive investment centre for both foreign and domestic fund managers. The changes were made following recommendations made by a panel of market practitioners and highlighted the Centre's position as the region's most competitive financial centre for fund managers. Following the enactment of the new funds regime, DIFC-based fund managers can now manage funds outside of the DIFC while foreign fund managers can now manage funds in the DIFC.

As part of its continuous efforts aimed at fostering international co-operation and dialogue between counterparties, the DIFC Authority signed six Memoranda of Understating (MoUs) with various jurisdictions including the UAE Central Bank, Dubai Department of Economic Development, Hong Kong Monetary Authority, World Bank Group's Multilateral Investment Guarantee Agency (MIGA), Paris Europlace, and recently signed with Luxembourg. The MOU are aimed at creating strategic partnerships with international jurisdictions thus strengthening the DIFC's offering to clients. At the same time, the other independent entities under the DIFC umbrella, the DFSA and the DIFC courts, have both signed a number of different cooperation agreements during this period. The DFSA signed MoUs with regulatory counterparties from around the world, including Denmark, France, USA and Canada bringing the number of bilateral MoU signed as of end of July to over 50 regulatory counterparts. The DIFC Courts has MoUs with judicial counterparties from Dubai, Abu Dhabi, and Ras Al Khaima, and has signed its first international MoU with Jordan.

Physical Infrastructure Development

From December 2009 till July 2010, the development of physical infrastructure continued with the addition of 308,687 square feet of commercial office space. Total leasable area, including third party developers, is now equal to 2,116,311 square feet of office space.

Occupancy of the DIFC's Gate District (Gate Building, Gate Precinct and Gate Village) remains high at 92% of the leasable space. Total office space in the DIFC's Gate District is 1,471,625 square feet, including an additional 170,000 square feet of leasing units which will become available shortly. This represents an annualised growth rate of 20% in terms of additional office space leased in the DIFC. In total, the Centre saw take up of over 160,000 square feet of commercial office space during the period, much of which was on behalf of existing clients focused on growing their business in the region. The area leased in the first half of 2010 exceeded the total area leased in the whole of 2009.

DIFC clients are beginning to move into the new offices provided by third party developers (Currency House, Currency Tower and Liberty House) and demand for these units is proving robust.

The total retail space available is 211,966 with 66% of which is currently occupied. The DIFC is in the process of revising its retail strategy to bring the services offered into closer alignment with the needs of the DIFC community. Following consultation with clients, a new range of retailers will be joining the Centre, featuring more fine and casual dining restaurants, groceries and food shops as well fine art galleries.

Client Partnerships

In the first half of 2010 the DIFC's senior management, in consultation with its clients, completed a comprehensive strategic review and analysis of the core business proposition.

The future success of the DIFC is inherently linked to supporting its existing clients to grow their businesses serving MEASA from the Centre. The DIFC is focused and committed to providing a competitive environment from which companies may expand their businesses and support their long term growth plans.

At the same time, extensive analysis and benchmarking of costs have also been reviewed. Accordingly, the DIFC plans to reduce the cost of doing business from the Centre and enhance client services, to encourage the future growth and expansion of its clients' businesses. The DIFC is committed to undertaking a regular review of its pricing model to ensure it remains competitive.

In addition to the range of DIFC services and its pricing policy, the strategic review has encompassed the continuing evolution of the legislative and regulatory framework, the continued development of the Centre's infrastructure and the introduction of a new range of retail services.

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