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01 December 2023

Dubai Internet City logged on to growth in face of global crisis

No technology companies have shut operations in DIC due to the financial crisis. (FILE)

By Nancy Sudheer

It's business as usual at Dubai Internet City (DIC) despite the global financial crisis, says Executive Director Malek Al Malek.

No technology companies have shut their operations at the free zone – and in fact a few have requested larger premises.

"Technology companies have faced a backlash at their headquarters," said Al Malek. "But these companies have shown an interest in investing in this region. As global companies see potential in this region they will divert their investments here.

"This region is a source of liquidity for companies worldwide. It's very difficult to invest in the US, which is why companies there are cutting staff and reducing costs."

Al Malek said DIC had no plans to reduce rents, which he said were already below market prices.

"While market rates rose sharply we always had steady increases as our goal is to support the growth of the information and communication technology (ICT) industry. Today our offer has to be competitive compared with other free zone clusters.

"The region is witnessing strong growth, especially in the IT and telecoms sectors. The market has been growing at a double-digit rate and in the next 18 months growth will just slowdown."

DIC – a division of Tecom – has had 100 per cent occupancy for the past three to four years and currently houses 1,300 companies. The number of businesses taking office space has grown by 20 to 30 per cent every year since the zone opened in in the year 2000.

The problems faced by the real estate sector do not seem to have affected the free zone company.

"We don't look at ourselves as a property developer but as an ICT cluster. Ours is not simply a property with a tenant – instead we have a business partner. The overall property development is affected to some extent but this is sustainable."

Al Malek said there were no plans to reproduce the DIC model elsewhere in Dubai as there was enough space at the current site to meet demand.

"The UAE is too small to replicate this model but we have been approached by other countries, both in the region and internationally. This is the reason our sister concern, Smart City, was created. It has already made an impact globally and all the free zones here will be replicated in other parts of the world."

In the meantime, DIC is addressing issues such as providing adequate broadband services to IT majors and business process outsourcing (BPO) establishments at the zone. The recent damage to under-sea cables in the Mediterranean affected many businesses in the Middle East.

"There are projects under way with telecom cable companies to address the broadband issue. These cable companies have realised that the region needs more than what it is getting today.

"These projects involve links to other parts of the world and will take more than a year to complete."

Because of cost factors there are no outsourcing majors from India at the zone.

"Our sister concern Dubai Outsource Zone has invited a lot of these companies and offers a completely different cost structure. So far the project has been successful as it has already launched a number of phases.

"A lot of banks have their back-up operations in the zone but it still cannot be compared with India. Even if we have only two or three per cent of their business we consider that successful."