Knight Frank releases the UAE Industrial & Logistics 2017 Insight Report

02 April 2017

 Dubai, UAE- Government and government related entities continued to invest heavily in industrial infrastructure and facilities throughout the UAE in 2016. Key industrial projects and growth areas include Khalifa Industrial Zone Abu Dhabi (KIZAD), Dubai Industrial City, Dubai South and an expansion of Dubai Airport Free Zone and in the northern emirates, the Sharjah Asset Management recently launched Al Saja’a Industrial Oasis.

These continued investments underline the UAE’s ambition to become a more diversified economy and elevate the country into a global hub for sustainable and innovation focused businesses.

Demand for industrial warehousing saw a modest decline in 2016, as a result of economic headwinds such as a low oil price, a strong US dollar and global instability. Rents for grade A warehousing remained flat in 2016 despite an overall decline in demand, due to a lack of supply. However, rents for grade B warehouses have further declined in 2016.

Dubai Market

  •  Grade A industrial rents have remained flat on an annual basis, partly due to a lack of quality warehousing in the emirate, particularly in on-shore locations.
  •  Grade B industrial rents have witnessed year-on-year declines of 13% on average across various submarkets as expected with often poor and outdated stock.
  • Greatest demand in 2016 was from the general trading; industrial manufacturing; logistics and SME sectors.
  • 11% of enquiries are from SMEs, seeking onshore warehousing of less than 5,000 sq ft BUA.
  •  There has been a decrease in medium sized enquiries and transactions for circa 50,000 sq ft BUA warehouses, with occupiers postponing major purchasing decisions.
  •  There is a growing appetite for industrial property as an investment asset due to the attractive yield profiles and perceived resilience to adverse economic conditions.

Abu Dhabi industrial market

  • Areas with poorer quality warehousing and infrastructure such as Musaffah, have seen declines in rent in the region of 9% in 2016.
  • KIZAD continues to invest heavily in world-class infrastructure and terminal capacity, driving a flight to quality for companies and investors in 2017.
  • In 2016, the greatest number of enquiries came from the general trading sector, comprising 26% of total interest. With 15% and 13% of enquiries coming from the SME and IT sectors respectively.
  • Enquiries from the construction sector were down to 10% of total enquiries in 2016 compared to 50% in previous years.

Sharjah industrial market

  •  Industrial rents are 30 - 40% less than the average for grade A warehouses in Dubai.
  •  Demand for industrial property continues to grow in Sharjah, particularly driven by the movement of occupiers from older, poorer provisioned industrial parks to newer industrial areas with better infrastructure.
  • Al Saja’a Industrial Oasis, is a new industrial area of Sharjah stretching over an area of 14 million square feet and comprises 353 plots for light and medium industrial, offering freehold land titles for Arab nationals and 100 leasehold for all other residents.
  • The strong market fundamentals, property rights and cost savings to businesses, make Sharjah industrial a sector to watch in 2017.

 

For further information, please contact:

Nicola Milton, Head of ME Marketing, +971 4 426 7000, Nicola.milton@me.knightfrank.com

Ahmad Shokair, Marketing Assistant, +971 4 4267 644, Ahmad.Shokair@me.knightfrank.com,

Dana Salbak, Head of ME Research, +97144267681

Dana.Salbak@me.knightfrank.com

 

Ends

Notes to Editors

Knight Frank has a strong presence in the Middle East with offices in Abu Dhabi, Dubai, and Saudi Arabia. The Group advises clients ranging from individual owners and buyers to major developers, investors and corporate tenants.

Knight Frank LLP is the leading independent global property consultancy. Headquartered in London, Knight Frank and together with its New York-based global alliance partner, Newmark Grubb Knight Frank, operate from over 413 offices, in 60 countries, across six continents and has over 14,000 employees. For further information about the Company, please visit www.knightfrank.ae