Industrial demand shifts base to Dubai South

dubai - Jafza and DIP are also commanding a great share of occupier interest

Demand in Dubai's industrial market remained buoyant in the first six months of 2016, with occupiers moving and expanding their operations in greater numbers towards Dubai South, pre-empting the expansion of Al Maktoum International Airport and the Expo 2020, according to Cluttons.

With the seasonal push for logistics contracts heading into Q3, areas such as Jebel Ali Free Zone (Jafza) and onshore locations such as Dubai Investments Park continue to command a great share of occupier interest.

Faisal Durrani, head of research at Cluttons, said: "Rents for Class A units in areas around Al Maktoum International Airport now stand at Dh60 psf, the same level as at Dubai Airport Free Zone, which goes to show the rising popularity of areas towards the new airport, where the next stage of expansion is set to be announced in the near term."

Cluttons' research shows that Dubai's most expensive area for Class A and Class B industrial space is Silicon Oasis, where rents stand at Dh77 psf and Dh65 psf respectively. Jebel Ali Industrial Area remains the most competitive area for Class A space with rents standing at Dh35 psf, while secondary space at Jebel Ali Free Zone is the city's lowest at Dh24 psf.

Activity levels are also rising in new locations across the city, including Dubai Science Park, where a second phase of warehouse space has been commissioned and is expected to be completed in 2017.

Build-to-suit facilities have increased in popularity over the last 12 months, with Dubai South and Jafza being the focus of such activity. The government has been quick to react to increasing demand and has moved to support growth, recently announcing that international developers and investors will be permitted to buy land in freehold areas of Dubai South.

Murray Strang, head of Cluttons Dubai, said: "Looking ahead, it is our expectation that rents for warehouses will continue to remain relatively unchanged over the next six to 12 months."

"Looking further ahead to next year, it is likely that there may be a slight upturn in overall warehousing activity as the Expo draws closer. We are yet to see a major Expo-linked boost to the market; however this is something we expect will materialise 18 to 24 months prior to the event. Specifically, we expect to see requirements from the construction, hospitality and food and beverage sectors start to tick up directly as a result of the 2020 Expo."

- business@khaleejtimes.com