For Dubai, the Arab spring has been a boon, in finance as much as tourism. Dubai’s financial centre says financial houses, including some from the competing banking hub of strife-torn Bahrain, are taking advantage of Dubai’s status as a safe port amid the storm of regional unrest.
The Dubai International Financial Centre says several banks are relocating staff to the centre, helping the tax-free financial hub grow by seven per cent to 848 companies last year.
Companies such as Credit Agricole, ABN Amro’s asset management arm and Nomura have already moved staff from Bahrain to Dubai, or are in the process of doing so.
Citi, Zurich Insurance and Julius Baer have all taken additional space within the DIFC, while others, such as ICICI, JPMorgan Chase and Morgan Stanley, have upgraded their licenses to “cater to a wider regional client base,” the DIFC says.
A source at BNP Paribas’ Manama-based regional headquarters says the French bank is maintaining its operations and headquarters in Bahrain, with a new DIFC wealth management office to be staffed by bankers from another Dubai office and Bahrain. BNP Paribas declined to comment.
Around 12,000 people now work in the centre, up by 1,000 since 2010. The increase in workers comes even as some major western financial institutions have been shedding staff amid the tough market conditions of 2011.
Several banks, including Credit Suisse and Deutsche, made redundancies and relocated staff out of Dubai as business dried up amid torrid market conditions that accompanied the revolts of 2011.
The DIFC – whose investment arm has a $1.25bn bond maturing in June – says it is receiving fresh interest from Asian banks, with the centre benefitting from the broader trend for Dubai to become the location of choice for emerging markets companies seeking to expand into the oil-rich Gulf.
The centre says it has attracted 21 of the top 30 global banks; 6 of the top 10 insurance and law firms; and eight of the top 20 wealth managers.
A quarter of companies based in the centre are from the Middle East and North Africa, with 11 per cent from Asia. Europe accounts for 37 per cent, and 17 per cent are from North America.
The enhancement of non-regulated companies and retailers also helps explain corporate growth. The number of regulated entities grew 3 per cent between 2010 and 2011. Non-regulated companies grew 7 per cent. Retailers grew by 24 per cent.
Occupancy in the core area of DIFC-leased office space remains high at 95 per cent. Third-party buildings within the DIFC district, such as Currency House and Tower and Liberty House, have seen occupancy rise from 44 per cent in 2010 to 72 per cent in 2011.
But a closer look at the occupancy numbers shows that Dubai will need to market itself even more this year to meet upcoming supply.
Around 1m sq ft of leasable office space became available in late 2011 in three new privately-owned buildings: Emirates Financial Towers, the Index Building and Park Towers. If these offices were included in the 2011 statistics, third-party occupancy would have fallen to around 30 per cent.
So there is still space aplenty, but given the misfortune of other Arab states and rising interest from the east, it may well be needed.
Get alerts on Emerging markets when a new story is published