GEC NEWS WIREDubai’s real estate sector is responding to global trends by moving away from the traditional model of free zones, and encouraging greater diversity through new digital clusters, reveals JLL’s new report, launched at Cityscape 2018.
According to the report, new digital geographies are emerging globally as technology and digitization change the nature of how cities evolve. These changes are clearly apparent in Dubai, as the city adopts new technologies and continues to emerge on the global digital map.
Dubai’s economic growth has been built on creating clusters of similar businesses in a range of free trade zones, with the existing 26 free zones accounting for more than 30% of the Emirate’s economy. This traditional model is now being refined in the light of changing global trends, which will result in changes to the future pattern of clusters of economic activity across the city.
The evolving model includes a more flexible licensing regime which attempts to spread the advantages formally limited to specific free zones more broadly across the whole city. The real estate sector is responding to this relaxation by creating a range of different high, mid and low rise mixed use environments providing a combination of office, retail, residential and hotel uses.
The pace of the legislative reforms is quickening with more dual license arrangements and newly announced plans to allow 100% foreign ownership of companies outside of free zones before the end of 2018.
“Dubai has long recognized that the real estate sector plays an important role in the overall objective of promoting the growth of the economy. Dubai is now responding to global trends by creating clusters of digital activity based on the rapid adoption of new technologies,” said Craig Plumb, Head of Research, JLL MENA.
“Free zones have created more pronounced clusters by business sector, than on shore locations, with the most successful free zones in Dubai generally achieving the highest levels of concentration and specialism. With the government relaxing investment and licensing laws, the time is now here to level the playing field by reducing the distinction between free zones and on shore locations. The expansion of the dual licensing system should help create a greater diversity of occupiers and promote a more attractive digital ecosystem,” he added.
The report also highlights Dubai’s success to date in attracting large mature companies and the need for more emphasis on the SME sector. New startup businesses will be encouraged through policy initiatives aimed at promoting innovation and the creation of new companies utilizing elements of the digital economy. Multinational companies have played a key role in the economic growth of Dubai over the past 30 years, but this situation is likely to change with the growth of new SME’s and the increased influence of corporates from South and East Asia.
Dubai is firmly on a journey to becoming an innovation-led ‘New World City’, underpinned by high lifestyle qualities, an outsized influence on the world stage and a broad real estate offer. “As the city responds to new global digital geographies, Dubai will continue to offer a unique blend of attractions for tech-savvy local and international companies. The creation of a range of new physical environments will play a key part in the city’s transition to an innovation-led New World City”, according to Jeremy Kelly, Head of JLL’s Global Research Programmes.
