Dubai International Financial Centre
DIFC, the financial and business gateway between the regional emerging markets and the world, updates the market today on its strong performance in 2010.
The number of active registered companies operating from DIFC continued to grow throughout the year to reach 792 companies at the end of December 2010.
113 Companies registered in 2010, with 52% of new companies registered coming from North America and Europe while 45% from Middle East and Asia, confirming DIFC’s position as the gateway connecting East and West.
H.E. Ahmed Humaid Al Tayer, Governor of DIFC said:
“The solid growth witnessed by DIFC in 2010 reflects the importance of the Centre to financial and business institutions looking to take advantage of opportunities present in the UAE and the wider region. With its continuous efforts to develop further its modern infrastructure, free zone offering and self-governing laws and courts, DIFC has consolidated its position as the pre-eminent and favoured financial centre in the region.
“We have already started reaping the rewards of our new business strategy and we are confident that DIFC will continue to play an important role in providing market participants vital support in the rapidly changing business environment in the region.”
Abdulla Mohammed Al Awar, CEO of DIFC Authority said:
“We are very proud of the growth and success we have achieved on different levels in 2010. There is no doubt that the road ahead remains challenging. However, we believe that there are still many untapped opportunities that our new strategy will position us to take advantage of. We are committed to growing our existing client partnerships and we look forward to the continued support and guidance of our clients in our journey together to achieving greater success.”
In spite of the challenging global economic environment of the last two years, DIFC continues to grow as one of world’s top international financial centres connecting the regional emerging markets with the rest of the world. As of 31 December 2010, 792 active registered companies have a presence in DIFC (H1 2010: 745 companies), with 313 regulated and 396 non-regulated companies, and 83 retailers (H1 2010: 297 regulated, 374 non-regulated, and 74 retailers).
The growth in number of registered companies remained consistent in the last three quarters of the year at around 31-32 companies per quarter. On the other hand, the number of registration withdrawals continued to decrease, with Q4 recording the lowest rate in 10 Quarters (2 companies).
Today, the geographical diversity of firms operating out of DIFC continues to show the Centre’s global stature, with approximately 41% of regulated firms coming from Europe; 30% from the Middle East, 16% from the US, 10% from Asia, and 3% from the rest of the world. The number of firms from Europe and the US (52% in 2010) is almost perfectly balanced by the number from the Middle East and Asia (45% in 2010), underlining the Centre's position as the business and financial gateway connecting East and West.
DIFC is also home to 16 of the world’s top 20 banks, 8 of the world’s largest asset managers and 4 of the world's 5 largest insurers. (Source: Forbes Global 2000 List). A number of the new companies establishing a presence in DIFC are first time entrants into the region.
The success of DIFC’s strategy to build a business ecosystem that supports the growth of its clients is also evidenced by the number of clients who increased their physical presence and deployed more resources in the region. This includes major international firms taking up significant additional space within the Centre, such as, S&P, State Bank of India, and Deloitte. Other firms have expanded their operations dedicated to the region, including Credit Suisse which has strengthened its integrated banking operations in the Middle East. Meanwhile, several major international financial institutions expanded their existing regional businesses managed from the DIFC to include their interests in Africa, thereby using DIFC as a platform to expand their regional footprint.
Soft Infrastructure Development
DIFC is committed to providing the regulatory framework and legal system that is recognised internationally, and to continue developing these to enhance the growth of financial services and commercial activities in the region.
Throughout 2010, both the DFSA and DIFC Authority introduced multiple regulatory changes in order to expand DIFC's offering, improve the ease of doing business and investing in the Centre. In H1 2010, the DFSA, after consultation with a panel of market practitioners and experts, made a series of regulatory changes to DIFC’s Collective Investment Funds regime in order to make the Centre a more attractive investment centre for both foreign and domestic fund managers. In Q3 2010, the Carlyle Group became the first company to establish and manage an investment vehicle under the new funds regime.
In order to enhance provisions of Protected Cell Companies (PCC), DIFC Authority made changes in Q3 2010 to existing Companies Regulations provisions dealing with PCC based on recommendations made by a panel of market practitioners and the DFSA. The amendments intended to address the redemption of Units of open-ended Sub-Funds in accordance with net asset value (NAV) calculations as required under Collective Investment Rules (CIR).
In Q4 2010, the DIFC Authority enacted changes to Real Property Regulations to expand on the circumstances where a freehold transfer fee is not payable, bringing further clarity to regulations.
2010 also saw continued DIFC Authority efforts aimed at fostering international co-operation and dialogue between counterparties, as well as creating strategic partnerships with international jurisdictions thus strengthening DIFC’s offering to clients. Six Memoranda of Understating (MoUs) were signed in 2010 to bring the total up to 11 MoUs with various jurisdictions. The MoUs signed in 2010 were with Luxembourg, Madrid Centro Financiero, the UAE Ministry of Finance, the Economic Zones World, the Dubai Department of Economic Development and the Dubai Department of Tourism & Commerce Marketing.
Meanwhile, the other independent entities under the DIFC umbrella, the DFSA and DIFC Courts, have also both signed a number of different cooperation agreements during 2010.
Over the course 2010, DFSA entered into eight new bi-lateral MoUs and two new multi-lateral MoUs, bringing the total MoUs signed to date to 56. New bi-lateral MoU partners include Qatar Financial Centre Regulatory Authority, Autorité des Marchés Financiers (France), New York State Banking Department and The Office of the Superintendent of Financial Institutions, Canada. Meanwhile, DFSA signed multi-lateral MoUs with the Asian-Oceanian Standard-Setters Group and International Association of Insurance Supervisors.
Meanwhile, DIFC Courts signed its first international MoU with Jordan in Q2 2010. Adding to its existing MoUs with judicial counterparties from Dubai, Abu Dhabi, and Ras Al Khaima.
Physical Infrastructure Development
Demand for space at DIFC continued to grow during the second half of 2010 fuelled by the Centre’s attraction of new regional and international clients, and the appetite of existing clients for business expansion. Development of DIFC’s physical infrastructure continued steadily in 2010 with 300,950 square feet of commercial office space supplied, bringing the total leasable area, including third party developers, up to 2,074,818 square feet of office space.
Commercial space leased by new and existing companies increased by approximately net 253,000 square feet in 2010, representing an annualised growth rate of around [19%]. The area leased in the first half of 2010 exceeded the total area leased in the whole of 2009.
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 (total commercial office space: 1,235,000 square feet). Other occupancy including third party developments (Currency Tower, Currency House and Liberty House) is currently at 44% (total commercial office space: 768,926 square feet). 2010 also witnessed the move of DIFC clients into these third party developers’ offices space, as well as a robust demand from new companies.
A total area of approximately 2 million square feet of commercial office space is expected to be delivered by third party developers over the next 18-24 months.
Total DIFC owned retail space available as of end December 2010 increased to 246,500 square feet (H1 2010: 211,966 square feet), of which 71% is occupied (H1 2010: 66% occupancy). The retail space occupancy has remained healthy with the addition of a new range of retailers offering services that meet the needs of the DIFC community.
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.
Following a consultation with its clients in H1 2010, DIFC completed a comprehensive strategic review and analysis of its core business proposition which covered the full range of DIFC services, its pricing policy, 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.
In Q4 2010, DIFC revised the cost of doing business and announced a new pricing structure that took into consideration the importance of long term visibility of operating costs to its clients. The revised pricing structure, which is expected to stimulate economic growth by creating a cost competitive business environment in DIFC, entailed revisions to office space rents as well as operational fees (visa services and registration fees).
Since it has announced its revised price structure, third party owners of office property in DIFC have confirmed their commitment to this new structure, ensuring that clients establishing presence in upcoming commercial properties in the Centre would also benefit from the competitive rates.
DIFC is committed to undertaking a regular review of its pricing model to ensure it remains competitive.