In a bid to halt an exodus of tenants and become more attractive the Dubai International Financial Centre (DIFC) Authority has unveiled a new pricing structure which will see some tenants pay up to 75 per cent less.
Dubai's DIFC to slash office rents
The Dubai International Financial Centre (DIFC) Authority today revealed a new pricing "matrix" for office rentals that will cut some tenants costs of doing business by more than 60 per cent.
The new prices will not offer an across-the-board cut, but will standardise prices in the centre and encourage businesses to grow by offering reduced rates for adding additional space.
For tenants that signed up at the peak of the property market in 2008 at prices as high as Dh750 (US$204) per square foot, the decline could be anywhere from 60 to 75 per cent, according to an analysis by The National.
Companies leasing larger spaces will pay less. For instance, if a company in the Gate Building leases less than 2,500 square feet it will pay Dh280 per square foot, while if it leases more 20,000 or more, it will pay Dh190 per square foot.
The long-anticipated move is part of the centre's efforts to move away from its previous focus on the office rental business toward becoming a major stimulus of economic growth in Dubai.
"This is part of our five-year plan," said Abdulla al Awar, chief executive of the DIFC Authority. "Before we had a single rate across the board... Now we have a pricing matrix that offers incentives to companies for growth."
Mr al Awar said the DIFC's main metric for performance was now impact on the gross domestic product of Dubai, not revenue.
The DIFC has also cut out some of the fees companies paid the authority and reduced parking costs. The centre has been adding cheaper food and beverage options to the main retail corridor under the Gate Building to further relieve costs.
The new price "matrix" is geared especially toward encouraging businesses to move more of their Middle East, Asia and Africa operations to the DIFC by making it cheaper to obtain additional space.
"We want to encourage businesses with desks to get offices, those with offices to get full floors, those with full floors to consider whole buildings," said Chirag Shah, the executive director of strategy at the DIFC.