JLT: The new business hotspot

Synergy University, the largest private university in Russia, has become one of the most recent additions to the leading academic institutions operating in Dubai. The university launched its first campus in the Middle East at the Dubai Multi Commodities Centre (DMCC) Free Zone in Jumeirah Lakes Towers (JLT). Dr Batra’s Homeopathy Clinic, the largest chain of homeopathic clinics in the world, has also revealed plans to open a branch in JLT.

“This year alone, we’ve seen companies join us from the UK, US, Canada, Germany, France, Egypt, India, Pakistan, Lebanon and more,” says Krysta Fox, Director of the DMCC Free Zone in JLT, which was declared the largest free zone in the UAE earlier this year.

JLT is becoming the hottest free-zone address for companies around the world. Property Weekly talks to business owners operating in the area to find out why.

A great mix

“More than 75,000 people work and live in the community and more than 7,400 businesses have chosen JLT as their business address,” says Matt Lomax, Director of Property, DMCC, the master developer of JLT and the licensing authority of the DMCC Free Zone.

“There are more than 220 retail outlets in the 200-ha development. Residents don’t need to leave the community to get their groceries, have their hair done, take their kids to dance classes or enjoy a nice meal.”

JLT brings together work, life and play in a lakefront setting and a prime location in the heart of New Dubai, along Shaikh Zayed Road. Its infrastructure has been developed by the master developer, but the towers have been constructed by different sub-developers, giving the area a good balance of uniformity and variety, explains Lomax.

At the centre of the development stands the 64-storey Almas Tower, the tallest commercial tower in the Middle East.

“We have seen an increased demand for premium commercial space, particularly from large corporations and multinationals,” Lomax tells Property Weekly. “To cater to this demand, we have recently announced plans to expand the DMCC Free Zone through the development of a 107,000-sq-m business park called One JLT and within it the world’s tallest commercial tower.”

The construction of the business park and the new tower increases the commercial space in JLT by 50 per cent, adding 743,224 sq m to the existing 2.9 million-sq-m built-up area in the free zone, making it the fastest-growing free zone in the country.

DMCC has been mandated by the UAE Government to establish Dubai as the global gateway for commodities trade, explains Fox.

“In just over a decade, DMCC’s Executive Chairman [Ahmad Bin Sulayem] has realised this,” he says.

“DMCC has enabled the flow of trade and enterprise through Dubai to grow immensely through the appropriate amount of regulation, physical and financial infrastructure, products and services we have brought to the global commodity trade markets.”

The flow of gold, for instance, has increased from $6 billion ($22 billion) in 2003 to $70 billion last year and more than 25 per cent of the world’s physical gold passes through Dubai.

Moreover, the emirate is now one of the world’s top three diamond trading centres, while the UAE is the world’s largest re-exporter of tea with a 60 per cent market share, valued at around $48 million annually.

Why DMCC?

“We offer our member companies unique benefits, including access to physical facilities, market infrastructure and trading platforms such as the Dubai Gold and Commodities Exchange, Dubai Diamond Exchange, Dubai Pearl Exchange, Dubai Tea Trading Centre and DMCC Tradeflow,” says Fox.

“There is also a range of commodities-backed financial investment tools, including the region’s first and fastest-growing derivatives exchange, DGCX, and Shariah-compliant hedge funds.

Free-zone members also enjoy access to freehold property, guaranteed zero per cent corporate and personal income tax and 100 per cent business ownership, all within a secure, regulated environment.”

Since its establishment in 2002, DMCC has welcomed companies from all sectors, including global giants such as Clarkson, Louis Dreyfus, Debeers Diamdel, Conoco Phillips, Rio Tinto Alcan, LVMH, Harley Davidson, Damas, GAC and Nutricia Danone.

DMCC Free Zone offers a marketplace for businesses ranging from start-ups to multinationals, says Fox.

There are currently more than 7,400 member companies in the free zone, including key market participants from the commodities sector value chain, as well as businesses ranging from shipping, recruitment, IT to advertising and fashion.

“On average, DMCC welcomes more than 200 companies per month to its free zone. That’s more than six companies per day, more than 95 per cent of which are new to Dubai,” Fox tells Property Weekly.

Value for money

Ahmad Bin Sulayem, Executive Chairman of DMCC, said in an earlier interview, “At the end of the day, there’s a huge difference why companies come to DMCC and not Dubai International Financial Centre [DIFC]. DIFC is very selective with companies and the amount of office space is nowhere close to [what will be available in JLT after] the expansion. If you put in the office space we have in the JLT expansion... it’s more commercial office space than DIFC and the [Dubai World] Trade Centre put together.”

“When compared to most other free zones, JLT has a distinct competitive advantage — pricing,” offers Sumeet Khubchandani, an expert in commercial property leasing and sales, specialising in JLT. “Rents in JLT are far below other major free zones such as Dubai Media City, Knowledge Village, Dubai Airport Freezone and DIFC.”

A Better Homes report also reveals that the average selling price of an office unit in JLT this month is about Dh700 per sq ft, compared to Dh1,000 per sq ft in Tecom.

“This is primarily because in the other free zones most of the property belongs to the zone, which usually fixes prices at a certain rate,” says Khubchandani. “In JLT, the free-zone authority does not own much of the property — thousands of freehold investors own the property. Due to competition, the rent is quite low as it’s linked to real-world demand and supply forces.”

However, Khubchandani also points out commercial rents in JLT are up by 80-100 per cent from three years ago.

“In 2010, the average rental rate for fitted offices in a good tower like Indigo Icon was Dh60 per sq ft. Now it has reached around Dh120 per sq ft,” he says. “Rates for shell-and-core [non-fitted] offices are up from Dh40 per sq ft on average to around Dh75 per sq ft.

“Similarly, rental rate for retail space has moved up from Dh90 per sq ft to around Dh175 per sq ft in the past three years.”

Residential prices

The property surge in JLT is due to a real demand for prime properties, fuelled by DMCC’s sustained promotional activities and the increasing number of licensed companies, says Khubchandani. The number of registered companies in the free zone is expected to increase from 7,400 to about 10,000 by the end of next year.

Better Homes reports that three-bedroom apartments in JLT are selling at Dh2.5 million this November.

Do rising rents serve as a deterrent? Khubchandani does not think so. “I do not plan to move anytime soon, as JLT is the ultimate convenient place to live in. I doubt you can find much fault with JLT,” says Khubchandani.

This sentiment is shared by other business owners in JLT.

“Even with the rents rising, JLT is one of the most cost-effective places to do business in Dubai,” says Chetan Karani, Founder of Mikura Pearls, one of the largest pearl jewellery manufacturers in the region. “With DMCC constantly striving to streamline their policies and cut as much of the red tape as possible, it is a very conducive environment for businesses to grow.”

Karani adds: “Especially from a jeweller’s perspective, DMCC provides an excellent location for businesses. Both the diamond and pearl exchanges are within Almas Tower. A large community of diamond and jewellery companies are situated in and around the tower, gold refineries and jewellery factories are on hand in JLT and the Gemplex, while the Dubai Gold and Commodities Exchange is located nearby.

“It is an alternative jewellery hub to the traditional Gold Souq in Deira.”

Other businesses

JLT is also a great place for other businesses to thrive, says Reshmi Anilkumar, Managing Partner of Memsaab Curry and Tandoor JLT. She believes the location of her new Indian restaurant has contributed to its success.

“JLT is already a restaurant hub with 80 per cent of the restaurants offering gourmet-quality food at an economical pricing and owners are operating the outlets themselves,” says Anilkumar. “Being in JLT gives our business access to nearby high-end residential and business communities.

“A high rent could be a deterrent if we were to expand within JLT, as space could become sold out or are limited. But this could happen anywhere else in New Dubai.”

­Ravi Bhusari, Co-founder and Managing Partner of Duplays, which organises sporting events, agrees.

“Despite rising rents, we are still happy to be calling JLT home,” says Bhusari. “One of the great things about JLT is that the retail rents are still comparatively low versus other high-density developments. This has provided great opportunities for new restaurant concepts to thrive. It’s refreshing not to have the same chain of restaurants that you find at JBR Walk or The Dubai Mall.

“Three years ago, we were attracted to JLT for two main reasons. The first is the ease of set-up, as all our licensing needs were managed here in DMCC at Almas Tower. Second is the office rent in JLT, which is about one-third of the cost of rents in Dubai Media City or Dubai Internet City.

“This allowed us to move in quickly and focus on our primary goal — build a business. It was also important to be located on the western side of the city as we often have meetings in Abu Dhabi to develop our client base.”

For his part, Zaigham Haque, Founder of The School of Culinary and Finishing Arts, is likewise very satisfied with his business address in JLT.

“I absolutely love our location next to the Almas Tower. Visually, it is very pleasing,” he says. “During the process [of finalising the location], I dithered and went back to the drawing board and started the search for a premises again. I couldn’t do better from a visual, ease of access or quality of infrastructure perspective. I made the right decision, choosing my particular spot and DMCC as my partner.”

Other developments

DMCC announced last year that it will convert one of its four lakes (Lake C) into a 55,000-sq-m park. Although there was opposition initially from some residents, property experts laud the move as a positive development for the area.

In July, DMCC also announced plans to build a community mosque, Masjid Uthman Ibn Affan, which will accommodate more than 1,000 worshippers. Large-scale parking and landscaping will also be constructed, says Lomax.

Dubai’s Roads and Transport Authority is also expected to complete the road projects in JLT by the end of the year. In the past three months, there have been significant changes to the road network. All road construction updates are regularly posted on its website dmcc.ae.