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Warehousing assets in Dubai on the rise

Article-Warehousing assets in Dubai on the rise

Urgency to invest in warehousing in Dubai increases in 2020, according to Savills

The Industrial and warehousing market saw significant interest in the first half of 2020, according to Savills’ industrial report.

“There was a sudden urgency among companies to shore up their online presence and invest in logistics and warehousing supply chain. As a result, the demand for Grade A industrial and warehousing space witnessed a strong increase across Dubai. This is a marked shift from the subdued activity levels which we reported twelve months ago,” said Swapnil Pillai, Associate Director Research Middle East at Savills.

Pillai added: “Transaction activity was driven by existing tenants taking up additional space to increase their inventory carrying capacity and by companies that had to invest in their warehousing and logistics capability to move their sales online.”

Freezones across Dubai saw the strongest demand, with e-commerce companies leading the space take-up. “As per the Department of Economic Development (DED), with online shopping gaining fresh momentum in the UAE, 102 new trade licenses were issued to date in April 2020. This was closely followed by companies from the 3PL (Third Party Logistics) sector that was capitalizing on the continued growth of online and omnichannel retail,” says Savills.

Savills argues that among the drivers for space was the healthcare sector, which has accelerated activity levels in the wake of the global pandemic this year.

“Companies from the sector were seen taking up warehousing space and industrial land for build-to-suit projects, especially within the Dubai Science Park. There was also a spike in enquiry levels and transactions across Dubai South, driven by the near completion of their first e-fulfillment center measuring approximately 355,000 sq. ft,” says Savills.

Luke Tipp, Commercial Agent at Savills Middle East said: “Majority of landlords reported occupiers to be at normal capacity or busier over the last quarter, with freight movements increased to give the rise in demand for medical supplies and groceries. Several sub-markets also witnessed a spike in demand for labour accommodations as companies looked to shift their employees from accommodations in other Emirates to tackle the challenges posed by the lockdown. Occupancy levels have remained stable and, in a few cases, it has marginally improved as companies have taken up additional space on a short-term basis. We have also witnessed an increase in take-up for land plots form companies to expand their existing facilities.”

“Moreover, we have witnessed an increase in enquiries for acquiring industrial and logistics assets from regional investment funds and family offices as well as high net worth investors. The focus is on income-producing facilities, with some considering high-quality logistics to secure occupier in one of the growth sectors: e-commerce, pharmaceuticals, 3PL, and FMCG.”

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