The Dubai Multi-Commodities Center has had a record year, fuelled by demand for gold and diamonds.
Golden era for pillar of free thinking
Free zones have been one of the key strategies of Dubai's economic development.
But the Dubai Multi Commodities Centre (DMCC) has been perhaps slow to catch the business community's imagination.
Compared to the Dubai International Financial Centre (DIFC), the Jebel Ali port and the media and internet free zones, DMCC appeared unfocused when it was set up in 2002.
"Mixed use" was the official description but critics felt it was confused and based in a development, the 200 hectare Jumeirah Lakes Towers (JLT) complex, that seemed perpetually on the verge of completion but which was never quite finished.
Ahmed Bin Sulayem, the DMCC's executive chairman, says there was another criticism.
"Some members of the gold souq, [located in the heart of Dubai by the Creek in Deira] we were just too far away. They said we were virtually in Abu Dhabi."
But that has changed, he says. "Now, we're close to everything, the Palm, the Mall of the Emirates, and yes, Abu Dhabi is only 45 minutes away, which is an advantage."
This change of attitude towards DMCC and JLT partly reflects the southward shift of Dubai's urban centre of gravity. It also reflects the success of the DMCC in attracting business to the free zone.
Mr Bin Sulayem last week announced the DMCC's best figures. About 975 new companies registered in the free zone in the first half of the year, an increase of 60 per cent compared with the same period last year, bringing the total to more than 4,600.
The expansion has given Dubai a new expertise to add to its skills in the "three Ts" - transport, trading and tourism. The emirate is now a global hub for trade in precious metals and stones with the value of gold traded in the DMCC last year up 35 per cent to US$56 billion (Dh205.68bn). The value of diamonds traded in the same period was 11.5 per cent up at 255 carats worth some US$39bn.
Now placed third in the world rankings for diamond trading, Dubai is becoming the Antwerp of the East.
"We have just kept engaging with companies and customers from around the world and it has paid off," says Mr Bin Sulayem.
"When some experts predicted the Arab spring and the European winter would persuade people to spend less, we have found the opposite effect. Interest in the DMCC has snowballed."
The global uncertainty since the financial crisis of 2008 has led to a surge in demand for haven assets such as gold, precious stones and other commodities, with China and India, in particular, still smitten by the gold bug.
But DMCC's success is not just down to the soaring gold price. Volumes of the precious metal have also increased with 1,200 tonnes last year traded at an average price of $1,571 per ounce, a 6.3 per cent increase on 2010.
Many of the new companies setting up in DMCC are from India and other parts of Asia, Mr Bin Sulayem points out, reflecting the shift in global trading patterns that has benefited other parts of the Dubai trading hub.
Dealing in precious metals and stones has been the headline grabber but the bread-and-butter business of the DMCC remains in rather more basic commodities such as ferrous alloy metals, tea, rice and pulses. The global conferences traders in these commodities demand are also an increasing source of income for the DMCC. The combined markets were voted the Best Global Commodities Exchange 2012 by Global Banking & Finance Review, a prestigious British financial publication.
As with the DIFC, another successful Dubai market, the other key part of the DMCC business is property. The JLT development caught the full effects of the downturn in the emirate's property fortunes with the downturn in prices beginning in 2008 - just as many of the free zones commercial and residential premises were coming on stream.
There are increasing signs the decline in prices has been halted and demand for prime commercial and residential property is picking up quickly. JLT is moving steadily from middle to prime-market status, according to Mr Bin Sulayem.
"The two Dubai Metro stations [at JLT] have made a big difference to how we are regarded in the property market," he said.
"Increasingly, JLT is being seen as a desirable place to live and work with a convenient road transport system and plenty of car-parking, which I've always seen as crucial to developments in Dubai."
The flagship tower block, the Almas Tower in the heart of the JLT development, is fully let, as are the Gold and Silver towers. The overflow is also pushing up demand in other newer premises.
By the end of this year, Mr Bin Sulayem expects 66 tower blocks to be completed in the free zone, with 50,000 people living or working within its boundaries. He hints at "other additions" to the JLT set-up are being considered that would make it even more attractive.
But does the DMCC have the regulatory structures in place to handle such breakneck expansion?
"We've stepped this up in the past couple of years," Mr Bin Sulayem says. "We have our own compliance department, which checks companies registering in the free zone, as well as their shareholders and employees. And, of course, we cooperate with the other regulators in Dubai, like the other free zone authorities and the Emirates Securities and Commodities Authority.
"We also adhere to international standards for commodities trading, like the OECD guidelines and the Kimberley Process [to guard against the trade in 'blood diamonds.']," he adds.
"Having a sound regulatory infrastructure is one of the reasons people want to come to DMCC in the first place. We've found that a lot of the demand comes from word-of-mouth feedback from existing customers."
The DIFC, the emirate's financial hub and in some ways a model for DMCC, recently announced it was to split its market activities from its property businesses in a fundamental restructuring of its operations. Will DMCC go the same way as it gets bigger and more successful?
"We're at a different stage, and … I don't believe there is a single model for the way free zones are administered in Dubai," says Mr Bin Sulayem.