Economic performance figures for more than 400 companies based in the Dubai International Financial Centre (DIFC) reveal a 2.4 per cent drop in their gross domestic product in 2009.
Revenues decline for DIFC firms
The combined revenue of companies in the Dubai International Financial Centre (DIFC) fell by 2.4 per cent last year to US$2.8 billion (Dh10.28bn) compared with the year before, officials said.
The modest decline of what the DIFC described as "gross domestic product" proved the resilience of the centre during the global financial crisis, said Dr Nasser Saidi, the chief economist of the DIFC.
The statistics were revealed in the DIFC Economic Activity 2009 report, which was based on a DIFC survey of 406 companies or about 57.5 per cent of the registered companies at the end of last year.
The results show that income at the public entities that run the DIFC and the banking sector declined by 15.2 per cent and 8.8 per cent, respectively, during the financial crisis.
For professional service entities such as law firms and accountancies, income increased by 24.8 per cent, the report said.
The DIFC was responsible for 3.8 per cent of Dubai's GDP last year and 1.1 per cent of the UAE's overall GDP, Dr Saidi said.
"The results of these companies are an indication of our performance," said Abdulla al Awar, the chief executive of the DIFC Authority.
That companies in the DIFC experienced only a relatively small decline during the global downturn showed the financial centre's strength, he said.
Dr Saidi also said the assets under management by wealth managers and other financial institutions in the DIFC had increased significantly over the past few years.
The report comes just a week after the DIFC cut the rental rate for offices in the centre by more than 50 per cent for some tenants with a new sliding scale of rates that are adjusted according to the amount of space being rented.
The centre is facing increasing competition from the Qatar Financial Centre and will soon be vying with a new central business district on Abu Dhabi's Sowwah Island, where tenants are expected to begin taking delivery of buildings next year.
While the lower rents will hit revenues, Mr al Awar said the new focus of the centre was to facilitate economic growth and have a larger impact on the economy.
Until 2008, the large rental cash flow funded billions of dirhams worth of acquisitions, some of which are now being sold and restructured.
In a change of strategy, the DIFC is promoting itself as the ideal centre for international businesses serving the Middle East, Africa and south Asia.
By making it cheaper for companies to obtain additional space in the DIFC, officials are trying to increase the growth of existing companies and encourage them to make the centre the base of their operations in the region.
The DIFC has been in flux over the past two years. Of the 999 companies that joined since its foundation in 2005, 217 had been liquidated as of November 30, according to the registrar of companies.
There were 782 active registered companies as of that date, of which 37 had joined in the previous four months alone.
The departure of prominent companies such as Credit Agricole Cheuvreux, the brokerage arm of the major European bank Credit Agricole, has shown that financial institutions are scaling back some of their overseas operations.
Analysts say financial institutions are among the quickest to react to crises, cutting staff and closing offices when revenues drop.
Ahmed Humaid al Tayer, the governor of the DIFC, said yesterday that "the consistent and uniform contribution to the UAE's economy during one of the most severe financial crises the world experienced proves the success of DIFC's strategy".