Dubai Free Zones

Hubs bring wealth and influence

The Dubai Airport Free Zone head office building

Dubai’s free zones, encompassing some iconic business enclaves, are acknowledged for their pivotal role in drawing foreign direct investment into the UAE and for serving as a platform for manufacturing and trade.

Jebel Ali Free Zone (Jafza) and Dafza (Dubai Airport Free Zone) are established hubs but some more recently developed ones including Dubai South and the Dubai International Financial Centre (DIFC) are gaining world attention for their services and influence. Just recently DIFC was in the news announcing that a Waldorf Astoria Hotel would be set up within its confines. 

“I have long admired the role DIFC plays in the world of international investment, benefiting from its east meets west location and world-class trading framework. As an iconic luxury brand originating from New York, another centre of global finance, I am delighted that we will welcome Waldorf Astoria to this international hub,” said Carlos Khneisser, vice-president of development, Middle East and North Africa, at Hilton Worldwide.

DIFC is also where Gate Avenue, the biggest single infrastructure project the financial centre has launched since it opened 12 years ago, will be built by the end of next year. “This is a significant step towards accomplishing our 2024 growth strategy that paves the way for the sustained development of DIFC,” said Essa Kazim, the DIFC governor.

Another landmark project underway at DIFC is the $1 billion development of the 54-storey building ICD Brookfield Place which is being created by the joint venture of Investment Corporation of Dubai (ICD) and Brookfield Property Partners. 

Also in DIFC-related news, HDFC International Life and Re Company Limited, a wholly owned subsidiary of HDFC Life, was granted a licence to operate at the financial centre, the first Indian reinsurance firm to do so.

New company registrations at DIFC increased from 242 in 2014 to 309 last year and the workforce size grew to 19,808. DIFC expects to triple tenant numbers within the next 10 years and expects most of the growth to come from China and the Asia-Pacific region. 
 

The Dubai International Financial Centre: marching ahead

The Dubai International Financial Centre: marching ahead

Dubai’s free zones have been gaining momentum over many years and today they account for more than $136 billion of trade. Jafza alone has a 21 per cent share in Dubai’s GDP and last year it attracted 32 per cent of total foreign investments into the country and registered trade of Dh321 billion.

Jafza’s warehouses construction has accelerated over time and currently there’s not much space to accommodate more, a fact that has prompted its management to consider building vertical storages.

“The concept of a multi-storey warehouse meets the increasing demand for Jafza’s facilities as the free zone has reached high occupancy levels. Jafza has always been known as an innovator,” said Sultan Ahmad bin Sulayem, who is chairman of the Free Zones Corporation.

Bin Sulayem, who is also chairman of DP World and of Ports and Customs, continued: “Over the years we have built warehouses and storage facilities with international specifications to meet our customers’ requirements. Our engineers have studied similar initiatives around the world and we have designed them to suit the requirements of the UAE. This includes taking into account high temperatures, the quality of trucks used in transport, the integration of advanced technology to reduce transportation costs and provide solutions.”

With more tenants signing up, Jafza plans to construct a new complex for light industrial units and warehouses. It is also implementing a plan to retrofit buildings and facilities to reduce energy consumption by 30 per cent. Over 85,000 traditional lamps will be replaced with LEDs and 31,000 old water fixtures will be replaced with efficient water units. The changes will save around 158 GW/hour of electricity and 1.2 billion gallons of water over the next six years years, amounting to monetary savings of Dh132 million. These steps will no doubt expand the allure of Jafza, which boasts more than 7,000 tenants and is endeavouring to draw more investments and businesses into its fold. Jafza, with 800 Indian companies, believes it could do with some more from India and in the past two years it has held several road shows there. The feedback is that many firms there are interested.

Jafza has also been eyeing China where Bin Sulayem led a delegation. China is Jafza’s largest business partner with trade amounting to Dh46.4 billion in 2015.

Meanwhile, there has been a steady stream of new enterprises setting up in the hub including GAC Dubai’s contract logistic arm which has built a co-packing facility.  


OTHER FREE ZONES

Dafza, which posted strong financial results in 2015, is developing its Strategic Plan 2017-2021 which it says will bring added value to its accomplishments.

“Dafza is taking steady steps towards positioning itself as a main player and major driver for economic development and trade growth in Dubai,” said Sheikh Ahmed bin Saeed Al Maktoum, chairman of the enclave.

“Last year’s buoyant financial results are testament to Dafza’s high potential and competitive advantages which reflect its pivotal role in attracting foreign investments in the coming months.”

One of the achievements Sheikh Ahmed is referring to is a 7 per cent growth in total revenue. Dafza also reported a 3 per cent increase in total assets growth as well as a surge of 22 per cent in registered companies with multinational firms growing 9 per cent in number. Leasable office space across the free zone jumped 11 per cent over 2014.

Another fast-expanding free zone, Dubai Silicone Oasis saw total investments reaching Dh3.6 billion. DSO projects were responsible for half that with the remainder coming from abroad.

Investments from overseas included the Dh1 billion Fakeeh Academic Medical Centre, the Dh500 million Avenues Mall Silicon Oasis and the Dh200 million Axiom Telecom headquarters.

Technology is the specialisation of 78 per cent of companies operating at DSO. Some 32 per cent of the companies are European, 24 per cent are from Asia and 22 per cent from the Mena region. The Americas account for 11 per cent while Australia and New Zealand have a share of just above 1 per cent.

The Dubai Science Park free zone is striving to become the most innovative and vibrant science community in the Middle East. It was formed as a result of a merger by Tecom Group of its Dubai Biotechnology and Research Park (DuBiotech) and the Energy and Environment Park (EnPark) in 2015.

The development was aimed at including companies that do not fit neatly into the biotech or environmental categories.