Today's Edition
MAYS IBRAHIM (ABU DHABI)
In the wake of a dynamic economic landscape, the industrial real estate sector in both Dubai and Abu Dhabi saw robust demand during the first quarter of 2024, according to the latest real estate market overview issued by JLL, a firm specialised in real estate and investment management services.
Abu Dhabi
The boom in Abu Dhabi’s industrial market was driven by the strong growth in the non-oil sector and the burgeoning e-commerce market, the report stated, noting an upswing in rental rates across major submarkets in the industrial sector.
“The strategic location and connectivity of industrial areas such as Khalifa Economic Zones Abu Dhabi (KEZAD) and the Industrial City of Abu Dhabi (ICAD) attracted heightened demand from tenants across various categories. To cater to this demand, the KEZAD Group revealed plans to expand warehousing capacity by over 250,000sq.m. through an investment of Dh621 million. These pre-built industrial and logistics facilities are projected to be completed and operational by the fourth quarter of 2025”.
The report further highlighted the rental performance in the sector during Q1, as warehouse rents in ICAD witnessed a 6% annual increase, reaching Dh370 per sq. m. per annum, while rents in KEZAD rose by 5% to Dh400 per sq. m. per annum.
The availability of Grade A supply positions KEZAD favorably as a prime location for tenants seeking high-quality warehouse space, according to the report.
It noted that industrial areas in the UAE capital, like Musaffah, experienced a remarkable surge in average warehouse rents, soaring by 25% in Q1 to reach Dh350 per sq. m. per annum, primarily due to increased demand fuelled by its proximity and connectivity to the city centre.
The report cited data by Abu Dhabi’s Department of Economic Development (ADDED), showing that the number of new industrial licenses issued in the emirate reached 363 in 2023, marking a 51% increase in comparison with the previous year.
“Aligned with the UAE’s Industrial Strategy, this trend is expected to persist as investments in the sector continue to attract prominent industrial and logistics companies”.
Dubai
Dubai’s industrial market continued its trajectory of robust demand outstripping available supply in prominent submarkets throughout Q1 of 2024, according to the report.
“Jebel Ali Free Zone (JAFZA) has successfully maintained its position as a well-established free zone for international trade in the UAE.
Notably, due to the new India-UAE trade agreement, JAFZA experienced a significant 28% year-on-year increase in the signing of new Indian businesses”.
The report highlighted an upcoming warehouse project, Bharat Mart, slated to open in JAFZA in 2026 with a total area exceeding 100,000 per sq. m., aims to bolster Indian exports, complemented by plans for a digital marketplace facilitating global purchases.
This surge in activity translated into a significant 26% annual increase in warehouse rents in JAFZA, averaging Dh365 per sq. m. per annum.
In older areas such as Umm Ramool, Ras al Khor, and Al Qusais, modest rental increases ranging from 5-7% were observed, driven by land scarcity and limited supply of new investment-grade properties.
Addressing Supply Shortages through Collaboration In light of the growing demand for quality industrial stock, developers are proactively collaborating to address supply shortages, the report stated.
Notable among these initiatives is the joint venture between Dubai South and Aldar to develop Dubai South’s Logistics District, encompassing a Grade A build-to-lease logistics facility covering approximately 24,000 per sq. m. of gross floor area, with a targeted completion date by year-end.
The report views that these strategic initiatives and partnerships are poised to fortify the UAE’s industrial landscape, effectively capturing escalating demand from diverse sectors including third-party logistics, e-commerce, and allied industries.
