Cheaper solution for media operations

Inside a trendy, purple-lit bar, a mixed gaggle of media executives is reclining on leather couches, alternating between their rare beef steaks and industry chatter.

Yet this is not Dubai Media City, nor more recent pretenders such as Abu Dhabi’s TwoFour54 media zone, but a bar in Fujairah, separated from the rest of the United Arab Emirates by the imposing Hatta mountain range.

The media executives are in town to hear more about Fujairah’s “Creative City”, a 40,000 sq m free zone for media – where foreign news operations can set up without a local partner – slated for completion in stages this year and next. Officials hope a modest media industry will add another strand to its economy, currently based on tourism and rock aggregate export.

The recession has hammered many UAE media companies, triggering significant job losses and increased cost-consciousness. While there are empty offices in DMC, the region’s leading media hub, rents have remained high, and companies are not allowed to set up elsewhere.

Danish Farhan, chairman of Xische, a boutique design operation based at the DMC, estimates that even a hot desk in Dubai costs about Dh50,000 ($13,600) a year, while a small one-person office costs Dh70,000 or more. Service charges and registration fees add thousands more to the annual bill.

Meanwhile, a hot desk at one of Creative City’s outlets will cost about Dh15,000 a year, and a larger office about twice that, according to Fujairah Media, the free zone manager.

“I know companies that are moving over to Fujairah simply because of costs,” Mr Farhan says. “The DMC rents are astronomical for what you get, and a lot of smaller companies, especially start-ups, can’t afford it.”

Mohammed, general manager of the Fujairah Municipality, insists that Creative City will “complement, not compete” with Dubai and Abu Dhabi’s media zones, but the emirate is clearly targeting smaller operations in Dubai in particular, executives say.

Ras Al Khaimah, another mountainous emirate, has also set up a media free zone that has managed to attract smaller companies.

“The Leo Burnetts and Saatchis will continue to be based in Dubai, as it’s still more fashionable and a hub to service the entire region but, for cost-conscious companies, Ras Al Khaimah and Fujairah are becoming more interesting,” Mr Farhan says.

So far, 250 companies have registered with Creative City, according to Mekki Abdullah, chief executive of Fujairah Media. They range from medium-sized companies with about 70 employees to one-man shops, with the bulk being businesses employing three to eight people, he adds.

The first three buildings of Creative City are scheduled for completion by the end of the year, with the last four buildings set to be finished by the end of 2011. “It’s a typical green but simple business park, and not expensive, so if it ends up empty it won’t be a financial disaster,” Mr Abdullah says.

Fujairah officials hope the attraction of opening an office in Creative City will be enhanced when a federally-funded highway from Dubai to Fujairah is finished late next year, reducing the commute between the two emirates.

Dubai’s infrastructure, size, commercial vim and entrenched media industry still makes the DMC the place to be in the UAE and the wider Gulf, executives say.

However, in the future, its pre-eminence may be eroded by smaller companies moving to Fujairah and Ras Al Khaimah, and the emergence of Abu Dhabi’s TwoFour54. Experts also question the sustainability of so many competing media free zones in one country.

“At the end of the day, there’s one cake and everyone wants a piece of it. The big boys will still go to Abu Dhabi or Dubai to be close to their main markets, but we want to attract the people that serve those larger companies,” Mr Abdullah argues. “We will bend over backwards for people, which they appreciate these days.”