Dubai Internet City and the New Business Districts

Dubai Internet City, the free zone created to attract technology and internet companies, is preparing to open beside Sheikh Zayed Road. It offers companies full foreign ownership, no taxes and ready-built offices, and it has already signed up some of the best-known names in the industry. For the property market, its importance goes beyond the offices themselves: it is moving the centre of gravity of Dubai's business economy further south.

A new employment hub

Until now, most of Dubai's offices have been in Deira, Bur Dubai and the first stretch of Sheikh Zayed Road. Internet City, located well beyond the Trade Centre, will bring thousands of jobs to an area where there is little existing housing or retail. That creates both a problem and an opportunity.

Where its employees will live

• Commuting from the older city will be possible but increasingly time-consuming as traffic grows.
• New communities nearby such as the golf-course developments around Emirates Hills will appeal to senior staff.
• Apartments close to the zone will be needed for younger professionals who want short commutes.

The free zone model

Companies in Internet City lease their premises from the zone's operator rather than buying them. That gives the government control over the quality and mix of tenants and allows it to replicate the model for other sectors. A media-focused zone is already being discussed, and if both succeed, the area could become a cluster of knowledge industries.

Implications for investors

Employment clusters tend to pull housing, retail and hospitality towards them. Investors should expect the land between Internet City, the coast and the new golf-course communities to become one of the most active development areas in Dubai. Residential projects with good access to the zone, decent amenities and quality management are likely to find tenants among the professionals it attracts.

The importance of the people it attracts

Technology companies bring a particular kind of employee: younger, internationally mobile, well paid and used to urban amenities such as cafés, gyms, good internet and flexible housing. They often prefer apartments over large villas and value proximity to work and leisure. If Internet City succeeds in attracting this workforce in large numbers, it will change the profile of demand in Dubai. Developers that design for these residents, with smaller, well-specified apartments, shared amenities and walkable surroundings, are likely to find a ready market. That is a different product from the large family villas that have traditionally defined Dubai's top end.

Our view

Internet City is a bold bet on the knowledge economy. Its success is not guaranteed, but if it attracts the companies it is targeting, it will reshape the map of Dubai and create a new centre of demand for homes and offices.