Dubai must overhaul business parks to attract global technology companies, Savills says

Dubai’s string of glass-fronted, out-of-town business parks is becoming too outdated for the digital age, a new report from the property broker Savills warns.

If it wants to attract the next big global economic driving force – a new generation of global technology companies – the city needs to change the way that it zones its property developments and create more pedestrian-friendly, “human-scale workplaces” that can be found in London’s Shoreditch or New York’s Union Square.

With the supply of office space in the emirate far outstripping demand and banks and hedge funds taking less space now than in the past, property developers and the Dubai Municipality need to think more carefully about how to attract a new breed of digital and creative occupiers, according to Savills.

Last year, Dubai’s office supply increased 13 per cent, as a number of projects that were stalled during the global financial crisis in 2008 and 2009 were finally completed.

Much of this stock is in out-of-town business zones such as Dubai Silicon Oasis.

The finance sector’s take-up of office space in Dubai fell 6.7 per cent year-on-year during the first half.

“Modern Dubai is a late 20th-century zoned automobile city,” said Yolande Barnes, the director of world research at Savills.

“In an industry where chance meetings and collaborations can add so much value, many of the more creative tech occupiers are moving away from the single-use environment and towards high-quality urban environments. This is at odds with the single-use, out-of-town approach of the free trade zones of Dubai.”

David Godchaux, the chief executive of Savills’ Dubai operation, said some developers were moving away from “mega- structures in which cars are essential, to more pedestrianised, urban communities which align with a high-end European lifestyle”.

To that end, the Tecom Group in Dubai has been trying to create areas in the Dubai Design District (D3) to attract creative start-ups such as those found in London’s Hoxton and Shoreditch districts.

The 21 million square feet D3 campus houses office space, small boutiques, galleries, workshops and artists’ studios, as well as specially designed housing.

Tecom’s Internet City and Media City follow similar principles.

On Tuesday, the property broker JLL reported that 283,000 sq metres of office space came on stream in the market during the three months to the end of last month, bringing Dubai’s total supply to 8.2 million sq metres. JLL said that an additional 948,000 sq metres were scheduled to be completed by 2017, adding that some delays were likely.

“Office demand has been focused on the higher quality offices of the central business districts, most notably the DIFC, which continues to see increased demand and thus higher rents,” said Craig Plumb, the head of research at JLL’s Dubai office. “Conversely, lower occupancy rates have resulted in a marginal softening in rents in secondary locations.”

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