by Paula Walshe, Savills Head of International Corporate Services, Dubai.
The recent announcement of the economic stimulus package for Dubai Free Zones, under the directive of Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, will help to ease the burden on corporate tenants.
Dubai Free Zones have around 45,000 companies and 390,000 employees, accounting for approximately a third of Dubai’s GDP.
The Government initiative includes: the postponement of rent payments for up to six months, facilitating financial payments through monthly instalments, refunding insurance and guarantees (such as tenant deposits), cancelling certain business penalties for companies and individuals and waiving annual licence fees for new companies and 10 per cent discount on renewal fees for existing licences.
This initiative gives tenants clear breathing space, and the ability to take a longer term view on business forecasts. It helps to reduce immediate costs to maintain business continuity and preserve jobs.
While the Covid-19 pandemic is mostly having a negative impact on organisations, there are certain industries which are booming as a result of the crisis. In Dubai, which is heavily reliant on imports, there has been a significant surge in air cargo requirements, increasing by 20 per cent year-on-year. This is set to increase further as the need to transport food and medication rises given the speed of air transport compared to road or sea.
Food supplies have been in huge demand as a result of which local supermarkets are generally stockpiling more than they have ever done before, which is likely to lead to increased demand for space to store their produce. We are seeing similar demand for logistics space as e-commerce increases while people are looking to order goods online instead of via retail stores or shopping malls.
While there are currently no government guidelines for private landlords, either on or off–shore, their role in the current crisis is vital. We have seen a trend in recent years for Dubai landlords to work collaboratively with tenants to find solutions, which has really helped to secure business longevity.