28 October, 2006

SMEs - Face land challenge

Everyone of us has been hearing a lot about the Real Estate boom and all the upcoming residential projects. But I guess the dilemma is that the huge residential boom has led to an acute shortage of commercial land. Not so in terms of space for offices but more for warehouses, fabrication facilities and small manufacturing setups.
So lets take a look at industrial areas:
  • Ras-Al-Khor (Rashidiya) is set to be vacated asap with the upcoming festival city on one side the huge bridge complex on the other and the train station in between.
  • Al-Quoz - Most of the bigger setups have been given notices to relocate as ofcourse the land they are sitting on has become prime real esate.
  • Al-Awir where sq ft prices are already about dhs30+.
  • Jebel Ali Industrial Area - No space available from development authorities.
  • Dubai Industrial Park - No spaces available from development authorities.
  • Dubai Industrial City - Minimum Plot size 50,000 sq ft / 2 dhs per sq ft, but the tenants must setup manufacturing.
  • Techno Park - same conditions as Dubai Ind City.

I don't think there is any other industrial area in Dubai unless I am forgetting any. And look at the discrepancy in the rates, DIC and Tech Park leasing out at dh2/sq ft while in other areas already the rates are dh25+/sq ft. So where should the small businesses go who are engaged in logistical operations, general trading, small scale manufacturing, fabrication and other service related projects. These play a vital role in creating jobs and providing sustainablility to the economy. This has nothing to do with locals or expats owning the business but SMEs are no doubt a necessary ingredient of the society. A recent report by Gannett News Service that employment by SMEs has been increasing in the US economy steadily. So I wonder if they plan to alot land on the seabed or else Dubai feels it needs no SMEs around and wants Sharjah and Ras-ul-Khaimah to enjoy the pie.


BD said...

SME's--Small & Medium Enterprises?

What is the source of your data? If correct your observation is interesting. Is this something the econmic planning authorities have missed? Is there a strategic plan to favor large enterprises over small? If so, is that a viable strategy?

It seems there is a zone for whatever type of enterprise the government wants to support? At present Al Rashidiya is full of auto workshops. With no auto workshop zone, does this mean that Dubai wants to push this industry into Sharjah? It doesn't seem that would make good business sense.

Career Mentor said...

I have also observed and highlighted this issue with some friends in the government departments before and apparently it seems that either they are not aware of this issue coming up or they have some bigger plan that is not yet public. But it is going to be a big issue in near future for SMEs.

BD said...

In Dubai it may be a case of not seeing the trees for the forest. The government likes to think big. So the small--as in the SME's--are getting overlooked. I suppose that in reality, no matter how many big companies or ventures you have the aggregate of all the small will usually overwhelm the collection of the large entities. This seems to be the case, especially in maturer economies.

I was once at one of those grubby autoshops in Rashidiya and the clerk told me that they would have to move because of Festival City. It didn't occur to me that this would mean the loss of a convenient and useful service. Instead I only thought how nice the grubby area would be cleaned up for something nice and attractive. Apparently, I was missing the larger picture.

marwan said...

Try leasing office space in Jebel Ali. Another fun merrygoround, that was.

Anonymous said...

I don't know about Jebel Ali, but Dubai Media City is a real and true nightmare. They will take your deposit money (min. AED 34,000) and then tell you that they will notify you when space is available. No estimates. They have no idea.

You sit around and wait. Then you decide to rent.. since, what the hell? You need to get started! You rent in Dubai because they are so kind to allow you to operate from Dubai 'temporarily'. Before you know it, it's been a year now.

During this entire period, you can only hire 3 people (including yourself) to have residence. I understand this number has been raised to 6. You are capped and can no longer recruit new people. So, you naturally break the law and either keep them on visit visas or end up letting another company do the hiring for you. Still illegal.

Then, they email you. You have 5 days to pay the first installment of your rent (4 months').. and the utilities for the contract's period (12 months). Oh.. and then there are some other fees. 5 days to pay.. starting from... NOW!

If you don't, you lose your license. So, Small enterprise surviving this type of treatment? Really tough. Medium enterprise? Maybe..

This is the zone that is supposed to make things easier for companies to get started. Unfortunately, the focus is still on attracting big names (even if they are just representative offices.. as long as their name shines on top of the building). While this is important for the success of the zone, there is very little attention paid to smaller companies.

A pity really.

BD said...

Interesting story. Sorry about your troubles. I guess for the big players, who can afford the lawyers, accountants, etc. such hurdles are part of the ordinary cost of business. Seems like Dubai should be giving more consideration to SME's.

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