Dubai’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, said JLL, a specialist in real estate and investment management, in its new report ahead of Cityscape 2018.
New digital geographies are emerging globally as technology and digitisation change the nature of how cities evolve, stated JLL in its report.
These changes are clearly apparent in Dubai, as the city adopts new technologies and continues to emerge on the global digital map, it 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, it stated.
JLL pointed out that Dubai’s economic growth had been built on creating clusters of similar businesses in a range of free trade zones, with the existing 26 free zones accounting for over 30 per cent 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.
According to JLL, 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, said the expert.
The pace of the legislative reforms is quickening with more dual license arrangements and newly announced plans to allow 100 per cent foreign ownership of companies outside of free zones before the end of 2018, it added.
Craig Plumb, the head of research at JLL Mena, said: "Dubai has long recognised that the real estate sector plays an important role in the overall objective of promoting the growth of the economy. It is now responding to global trends by creating clusters of digital activity based on the rapid adoption of new technologies."
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, noted Plumb.
"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," stated the expert.
"The expansion of the dual licensing system should help create a greater diversity of occupiers and promote a more attractive digital ecosystem," he added.
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," noted Jeremy Kelly, the head of JLL’s Global Research Programmes.
"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," he added.-TradeArabia News Service