The Dubai International Financial Centre (DIFC) is in flux with companies shutting down and new ones arriving in droves. Of the 973 companies that have set up in the DIFC since it opened in 2004, almost a fifth have dissolved, become inactive or been struck off by the registrar, according to an analysis of the DIFC Company Register. That leaves 780 active companies in the commercial facility. Meanwhile, 70 companies have arrived so far this year and 351 have joined within the past two years.
Marwan Lutfi, the deputy chief executive and head of business development at the DIFC Authority, said the DIFC was becoming a more focused financial centre. Many of the UAE companies that had a second office in the DIFC were under pressure to close one of their offices, while major banks were increasingly consolidating their international operations from around the region into the DIFC. About 65 per cent of companies in the DIFC used their offices to service operations across the region, Mr Lutfi said.
"At the centre, you see a lot of change taking place," he said. "All business is in a period of revising plans." Mergers between big western firms have also spurred some consolidation of offices. Dresdner Bank closed its offices at the DIFC after its merger with Commerzbank, which already had space in the centre. And the recruitment agency Whitehead Mann's offices were closed after its merger with Korn/Ferry last year.
But more high-profile exits are on the way. Credit Agricole Cheuvreux, the brokerage arm of the French bank Credit Agricole, is closing its DIFC office, officials said. While the company is still listed as "active" in the DIFC register, it has removed Dubai as one of its offices from its website and its employees have informed colleagues of the shutdown. Given those circumstances, Mr Lutfi said a key to growth was building on interest from companies in Africa, India and Asia.
Over the past year, the DIFC has been working with its advisers to devise a strategy for the next five years. This comes as the leadership has sought to wind down DIFC Investments, the investment arm that posted a US$562.3 million (Dh2.06 billion) loss last year. One of the main lessons learned from engaging with businesses in the centre, Mr Lutfi said, was the importance of being cash-conscious after the global financial crisis.
Taking that to heart, the DIFC plans to implement a range of cost reductions at the centre by the end of the year. "Most of the companies we have here now will enjoy some reduction of costs," Mr Lutfi said. This will include fee reductions for parking and other services. But rent costs will require more complicated negotiations, depending on the size of the company involved, the length of the lease and what rent was agreed on when a company came to the centre.
The goal now, Mr Lutfi said, was for the DIFC to aim for a "targeted return" rather than holding all tenants to the market rate. "That is a more sustainable approach for a financial centre."
