Plans to expand Dubai's financial center to three times its current footprint is set to offer investors an international base for FinTech services while the addition of retail and leisure spaces will boost its attractiveness as a central business district, analysts say.
The Dubai International Financial Centre (DIFC) will expand to include more offices, residences, retail and leisure offerings to create 'DIFC 2.0', a plan approved by Dubai's ruler Sheikh Mohammed bin Rashid on Monday. The expansion should attract more investments and solidify the DIFC's position as the region's top finance center, analysts say.
"“DIFC’s expansion plans will strengthen the emirate’s position as the region’s central economic and commercial hub and offer an international platform for FinTech and business innovation, augmenting the DIFC’s status as a leading global financial centre," Ehsan Khoman, head of Mena research and strategy at MUFG, said.
The DIFC, the government-owned free zone, is the biggest finance hub in the Middle East and hosts international banks, investment firms, insurance companies and financial service consultancies. Dubai jumped four positions to rank 15th in the Global Financial Centres Index, a survey of the world's most attractive financial centres. New York overtook London as the world's most attractive financial hub after the Brexit decision.
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Once finalised, the revamped district will boast 6.4 million square feet of office space, 2.6 million square feet of creative space, 1.5 million square feet of residences, 1.3 million square feet of retail space and 700,000 square feet devoted to leisure and entertainment.
"Like any new development, especially one of this scale, the key to success and integration into the existing market will be in the phasing," Simon Townsend, senior director at real estate advisory CBRE, said. "The inclusion of key additional sectors such as residential and leisure will add to the diverse offering and help cement the DIFC’s position as the region’s key financial district.”
Demand for prime office space will continue from global corporate clients such as those in DIFC or the Dubai World Trade Centre while the secondary and sub-prime office market will continue to face "challenging" conditions, continuing a pattern of a "two-tier" commercial property market, Mr Townsend said.
While the additional units in the DIFC pipeline will increase the supply in the market, it will allow the emirate to better serve the financial and tertiary services industry, Murray Strang, head of Dubai for Savills, said.
"It proves that DIFC is successful and that Dubai has a long-term view on being a great place to do business," Mr Strang said. "It is a positive commitment to improving and growing the prime CBD in Dubai and will ensure the emirate is geared up to serve blue chip for the long term."
Expansion of the DIFC follows the UAE's broader plan to attract more foreign investment, create jobs and increase non-oil revenues.
