DIFC Closes 2011 with Strong Performance and Stable Signs of Growth

The Dubai International Financial Centre (DIFC), the financial and business hub connecting the region’s emerging markets with the developed markets of Europe, Asia and the Americas, updates the market today on its positive performance in 2011.

Highlights

• Active registered companies up 7% to 848 companies at 31 December 2011 (2010: 792)
• Companies attracted from around the world with increasing interest from Asia and sustained interest from the Americas, Europe and Middle East.
• Geographical diversification of total regulated firms illustrates the global integration of DIFC with almost equal distribution of Eastern and Western companies
• Record growth in the breadth and depth of financial activity by the Centre’s active regulated firms with major international clients using the DIFC platform to expand their regional footprint
• Continued development of the Centre’s internationally-recognised regulatory framework and legal system
• Addition of around 1 million square feet of commercial office space
• Occupancy of DIFC's owned commercial offices in the Gate District (Gate Building, Gate Precinct and Gate Village) remains high above 95% of the leasable space. Occupancy up significantly in DIFC-owned retail space (from 72% in 2010 to 95% in 2011) and commercial office space within third-party developments (from 44% in 2010 to 72% in 2011)

Abdulla Mohammed Al Awar, CEO of DIFC Authority, said, "DIFC's achievements of recent years underscore our emergence as a global hub of finance and business. Our world-class infrastructure and common-law jurisdiction provide a stable platform for global and regional firms to access the regions emerging markets and beyond.

“Although the past 2 years were exceptionally challenging from a global perspective, the community in DIFC was resilient and this was noticed in the net positive growth in the number of clients that tapped into the DIFC during this period.

“We have the potential to double in size in the next five years, contributing to economic growth within UAE and the region as a whole."

Operating Review

Despite the impact of the European debt crisis, the global economic downturn and the regional changes witnessed last year, DIFC continued to strengthen its position as the leading international financial centre in the region. As of 31 December 2011, 848 active registered companies had a presence in DIFC (2010: 792 companies), with 322 regulated, 423 non-regulated companies, and 103 retailers (2010: 313 regulated, 396 non-regulated, and 83 retailers). The number of employees working in DIFC is around 12,000.

Alongside the sustained interest from the Americas, Europe and Middle East, 2011 saw an increased interest from companies in Asia to establish presence in DIFC. Today, the geographical diversification of total regulated firms illustrates the global integration of the Centre with approximately 37% coming from Europe, 26% from the Middle East, 17% from North America, 11% from Asia, and 9% from the rest of the world.

DIFC issued 135 new commercial licences in 2011, 71 of which were registered in the second half of the year, representing a 19% annual increase in registrations (113 registrations in 2010). The Centre welcomed 41 new regulated companies including BNP Paribas Wealth Management, Bank Vontobel Middle East Ltd., Paladin Capital Group, Jefferies International Limited and Attijariwafa Bank; 70 new non-regulated companies including Egon Zehnder International LLC; and 24 new retailers including Gaucho, Debauve & Gallais Chocolates and U energy boutique health club.

DIFC continued to successfully implement its strategy, which is heavily focused on building a business ecosystem that supports the growth of its clients. This was echoed in 2011 through the record growth in the breadth and depth of financial activity by the Centre’s active regulated firms with major international clients using the DIFC platform to expand their regional footprint. This included flagship firms taking up significant additional space within the Centre, such as Citi, Zurich Insurance Company Ltd, Julius Baer, and Franklin Templeton Investments. In addition, ICICI Bank Limited, JPMorgan Chase NA, FFA (Dubai) Limited, Morgan Stanley & Co International plc, Nomura International plc, and Merrill Lynch International (part of Bank of America Merril Lynch), all upgraded their licences in 2011 to cater to a wider regional customer base.

Furthermore in 2011, DIFC strengthened its status as the regional hub for the world’s leading companies. DIFC is currently home to 21 of the world’s top 30 banks, 6 of the world’s 10 largest insurers, 6 of the top 10 law firms and 8 of the top 20 money managers.

Benefitting from its world-class business hub stature, and the growing prominence of the Emirate of Dubai as a gateway connecting Europe, the Americas with the Far East, DIFC continued to reinforce its position as a global financial centre, with an undisputed status in the region between Europe & Singapore. Dubai was ranked as one of the top 10 international financial centres (8th) by The Banker (FT Business) out of 53 international Financial Centres, based on the level of international business and the value offered to international institutions seeking to expand their international operations. The Banker (FT Business) ranked DIFC ahead of centres like Zurich, Tokyo, Geneva, Luxembourg, Dublin and Chicago, and named it as the 3rd best location in the world for inward FDI in financial services.

Dubai also came 16th in the Xinhua-Dow Jones International Financial Centres Development Index 2011, and was the only centre in the Middle East to be evaluated. The Xinhua-Dow Jones Index provides a ranking of 45 international financial centres in terms of development capacity.

In addition, according to CB Richard Ellis (CBRE), Dubai remains amongst the top 10 most popular business locations in the world, with almost 56% of the world’s largest companies operating in the emirate.

Soft Infrastructure Development

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 2011, DIFC Authority introduced Hotel Operating Regulations, which were issued for the purpose of regulating hotels and their activities in the Centre, based on regulatory standards currently applicable to hotels operating outside the Centre’s jurisdiction in Dubai. DIFC Authority also issued amendments to its Operating Regulations relating to the fees for the issuance of Commercial Licences for Non-Profit Organisations.

The Centre’s prominent position was also supported by Law No (7) of 2011, which was issued by the Dubai Government last year, including amendments to a number of articles in Law No (9) of 2004 (‘Original Law’) that established the DIFC as the first Financial Free Zone in the United Arab Emirates. The amendments provided greater legal clarity and transparency, and stronger support to DIFC’s drive to become a global financial centre, complying with the highest levels of good governance and best practices.

The new law came as part of the ongoing strategic commitment by the Government of Dubai to diversify the Emirate’s economy by supporting the growth of the banking and financial services sector through DIFC. The new law also provided for the creation of a Higher Board presided over by the DIFC President, His Highness Sheikh Maktoum Bin Mohammed Bin Rashid Al Maktoum, Deputy Ruler of Dubai. The Higher Board also comprises representatives of the three DIFC bodies, will ensure that the bodies operate in harmony and unity of purpose by strengthening the levels of coordination without affecting their independence.

DIFC also continued to develop its relationships with strategic counterparties and organisations, hence strengthening its offering to clients. In 2011, DIFC Authority signed five new Memoranda of Understanding (MoUs) with (Shanghai) Pudong, Chengdu Financial City Investment and Development Co, Korea Capital Market Institute, Dubai SME and Dubai Land Department.

The DFSA, on the other hand, entered into five new MoUs in 2011 with Cayman Islands Monetary Authority, The Central Bank of Cyprus, The Reserve Bank of India, The Swiss Financial Market Supervisory Authority, and UAE Insurance Authority.

Physical Infrastructure Development

Demand for space at DIFC continued to grow during 2011 fuelled by the influx of new regional and international clients, and the appetite of existing clients for business expansion. Development of DIFC’s physical infrastructure continued steadily with the addition of about 1.8 million square feet of gross floor area of commercial office space that resulted from the Index Tower, Park Towers and Emirates Financial Towers developments.

A total of 262,000 square feet of new space was leased to new and existing companies during 2011, representing an annualised growth rate of around 14%.

Occupancy of DIFC's owned commercial offices in the Gate District (Gate Building, Gate Precinct and Gate Village) remained high above 95% of the leasable space (total commercial office space: 1,371,264 square feet). In addition, occupancy within existing third party developments (Currency Tower, Currency House and Liberty House which account for 768,519 square feet of commercial office space) rose substantially to 72% (2010: 44%).

Occupancy within the DIFC-owned retail space has also increased to 95% compared from 72% in 2010 (total DIFC-owned retail space: 233,519 square feet).

Client Partnerships

DIFC is fully committed to strengthening its partnerships with its clients by providing them the support required to grow their businesses as well as a competitive environment. The Centre continues to launch various initiatives to enhance its position as an attractive destination for regional and international companies looking to set up their offices in the region, reinforcing its efforts to remain an integral and important contributor to the UAE’s economy.

In 2011, DIFC completed a global business drive targeting companies from different business and financial sectors in China, India, Brazil, US and Europe. DIFC held a series of one to one meetings with leading institutions and financial services players, aiming to attract new companies into the Centre, and strengthen relationships with existing clients planning to grow their business in the region.

Building on this, DIFC Authority will carry on its global drive in 2012 to further strengthen its links with the main international financial centres such as Shanghai, Beijing, Mumbai, Tokyo, New York, and London.

For further comments by Abdulla Mohammed Al Awar, CEO of DIFC Authority, on the operating review, please see this broadcast interview on the following link: http://vimeo.com/37106386