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Dubai's property slump catches up with the city's finance hub
[DUBAI] Walk into the latest expansion of Dubai's financial district and you'll see a handful of small art galleries, some upscale men's tailors and plenty of retail space waiting for takers.
The Dubai International Financial Centre (DIFC) isn't being spared a slump in the emirate's retail and property market as it struggles to attract tenants to its one billion dirham (S$371.3 million) Gate Avenue expansion - a marble-lined underground promenade linking the hub's main district to nearby towers.
When the project was announced in 2016, officials said the kilometre-long passageway would have about 200 shops and restaurants and hoped that 90 per cent of the units would be leased on completion. Three years on and only about two dozen shops have opened since its launch in January. The rest remain boarded up.
The DIFC appears to be reacting to the disappointing showing. About half a dozen executives have left the DIFC Authority, which manages the free zone, in recent months. Chief real estate officer Nabil Alkindi moved on earlier this year, according to people with knowledge of the matter who asked not to be identified because the matter is private.
Pinaki Aich, who was in charge of group strategy and innovation, also departed, the people said. Christopher Payne, DIFC's chief economic adviser, left in April and Warren Krawchuk, a senior vice-president for retail, at the end of 2018, according to their LinkedIn profiles.
"We can confirm as with any evolving organisation, individuals have departed to pursue other opportunities either locally or internationally," Peyman Al Awadhi, the DIFC Authority's head of marketing, said in a statement, while declining to comment on individuals. The hub has also made some "key appointments within our management team to drive our vision of becoming a next generation financial centre".
Like the rest of the city, the business centre has suffered from a prolonged real-estate slump brought on by oversupply and slower economic growth. Dubai is set to see retail space surge by 42 per cent by the end of 2021, according to property adviser JLL.
The hub has also been impacted as global banks retreat to their home markets and has been turning to African and Asian institutions to fill office space. Barclays and Deutsche Bank have reduced their presence in recent years.
The authority is offering incentives, including free rent, for shops and restaurants to remain open, according to the people with knowledge of the matter. It's hosting events such as free yoga classes, comedy nights and a Beatles tribute band.
"We are confident of creating an even more vibrant community, highlighting DIFC as the destination of choice for connoisseurs passionate about art, music, food and fashion," Mr Al Awadhi said.
In spite of Gate Avenue's slow start, Dubai has multibillion-dollar plans to add an area almost the size of London's Canary Wharf to the financial centre. Dubbed DIFC 2.0, the plan will add 13 million square feet (1.2 million square metres), with a focus on fintech and innovation. It will also include 6.4 million sq ft of office space, as well as homes, shops and hotels.