Business | Markets

Dubai joins big league of global financial hubs

The Dubai International Finance Centre is gaining a real opportunity to rival the world's leading financial centres

  • By Babu Das Augustine, Deputy Business Editor, Gulf News
  • Published: 00:00 November 9, 2009
  • Gulf News

  • Image Credit: Virendra Saklani/XPRESS
  • The Dubai International Financial Centre in Dubai.

Dubai: In the early stages of its development, sceptics dismissed the DIFC as another mammoth real-estate development. After five years in existence, the epic-scale DIFC project has proven its critics wrong.

The DIFC's rapid growth over its first five years has propelled Dubai into the league of new financial centres that are challenging established global leaders like London, New York and Hong Kong.

The DIFC's fast progress since its launch points to its capacity for accelerated development in the years ahead. In fact, as the balance of global econ-omic power shifts eastwards, the DIFC has a real opportunity to realise its long-term goal of developing the same stature as the world's leading financial centres such as New York, London and Hong Kong.

"When His Highness Shaikh Mohammad Bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, announced the launch of the Dubai International Financial Centre, he outlined a clear vision for the initiative — to build a world-class financial centre that would establish Dubai and the UAE as a crucial hub in global finance.

DIFC's growth and achievements over the last five years have helped it move significantly closer to realising this vision," said Dr Omar Bin Sulaiman, Governor of the Dubai International Financial Centre.

The achievements are testimony to the speed with which the DIFC is advancing towards its goal. The Centre currently has 869 companies registered under its jurisdiction and the number of new registrations grew at a compounded annual rate of 127 per cent during the last five years.

The DIFC district has developed more than 5 million square feet of office and residential space and there are more than 14,000 professionals of 123 nationalities working in the district.

Areas of focus

There are five primary sectors of focus in the DIFC: banking services (investment banking, corporate banking and private banking); capital markets (equity, debt instruments, derivatives and commodity trading); asset management and fund registration (fund registration, fund administration and fund management); insurance and Islamic finance.

Within just five years all the big names in the global financial services industry such as Morgan Stanley, Merrill Lynch, Credit Suisse, HSBC, Julius Baer, Standard Chartered, RBS, to name a few, have huge global operations anchored within the DIFC.

The reasons why the DIFC appeals to these institutions vary, but universally include the benefits of access to the estimated $1.8 trillion (Dh6.61 trillion) of the region's private wealth. While some 45 per cent of Middle Eastern assets are currently held overseas, Arabs are now looking for investment opportunities closer to home.

"In an increasingly interconnected capital market, the DIFC plays an absolutely vital role. It is the bridge between east and west, it is the bridge between the region and the rest of the world, and for us as we do our business for our clients, frankly the role of the DIFC is absolutely crucial," says Stephen Green, Group chairman, HSBC.

DIFC strategy is to attract investment bankers, who are more likely to structure deals that recycle Arab capital rather than drive capital from the region to other international financial centres.

The global economic crisis is changing the face of the world's financial services industry. The rapidly changing environment, although challenging, will bring about its own set of opportunities.

While maintaining careful optimism, the DIFC is implementing revised strategies and launching new programmes to strengthen its global position. Despite the impact of the financial crisis on the regional financial services sector the DIFC is optimistic about a fast rebound in the sector.

"We are certainly not unscathed, but we have come through this difficult period without any systemic, or even institutional, failures ... There has been a challenge to liquidity in regional financial markets as international and inter-regional capital flows froze up. Despite all that, what can now be said with great confidence is that the region's legal and regulatory systems, financial institutions, and economies successfully weathered the crisis," says Dr Sulaiman

The DIFC's legal and regulatory framework and world-class financial market infrastructure continue to play a major role in its ability to attract international financial institutions and facilitate a range of business transactions.

The Centre is poised to invest further in the development of its regulatory regime and its capital market infrastructure to further diversify and deepen its financial services cluster.

Working closely with the Dubai Financial Services Authority (DFSA), the DIFC will strive to adapt quickly to the new global financial architecture and the changing needs of the financial services industry.

The DFSA already has a track record of regulatory innovation, having created the world's first Hedge Funds Code of Practice. In addition, the DIFC will further expand its role in promoting and strengthening corporate governance across the region.

DIFC is an onshore financial centre that provides a secure and supportive platform for financial institutions to develop their business.

Located in a large financial district, the DIFC has all the elements of a financial industry ecosystem: an independent regulator and judicial system, a common-law framework, a global financial exchange, leading-edge infrastructure, support services and a vibrant business community.

The quality and range of DIFC's supportive infrastructure make it the perfect base to take advantage of the region's rapidly growing demand for financial services.The DIFC has been designed as a "city within a city" that provides a complete range of business and lifestyle facilities for financial professionals.

The infrastructure within the financial district features ultra-modern office space, retail outlets, restaurants, art galleries, residential apartments and hotels.

The DIFC is currently spread over the Gate District and the Gate Village, which house thriving financial industry clusters as well as retail and lifestyle spaces.

DIFC is anchored by The Gate, an iconic structure that has come to symbolise the region's financial industry development. An example of contemporary architecture, The Gate is a 15-storey building that sits on an axis with the Jumeirah Emirates Towers and the Dubai World Trade Centre.

Do you think DIFC has become a global financial centre? Do such centres encourage interaction between businesses? Post your comments by clicking on the link below.

Comments (1)

  1. Added 08:06 November 9, 2009

    There is no doubt DIFC is doing a good job, but still it is in nascent stage and it will take time to become a mature and strong financial hub like canary wharf in London and Manhattan in USA. But still I think DIFC will grow and attract more companies. Excellent coverage by Mr.Babu Das Augustine. Keep it up.

    Jitendra Gianchandani, Dubai, United Arab Emirates

Gulf News
Retail Gold Rate
Business Editor's choice