Dubai Investments Park Industrial and Logistics Market Year at a Glance - 2020
While most other segments of the economy are currently grappling with slowing business due to the pandemic, the e-commerce space continues to boom, with consumers fulfilling all their shopping needs from groceries to fitness equipment through online channels. The surge in demand, coupled with a potentially permanent change in shopping behaviour even post the COVID-19 situation in favour of online retail, will likely spur demand for warehouses, fulfilment centres and other logistics facilities, especially in the onshore market. This trend has resulted in the stabilisation of most industrial areas in Dubai.
Supply ONSHORE INDUSTRIAL ASKING RATES (AED) - DECEMBER 2020
Most of the newly built stock in DIP and other onshore areas does not match international standards as developers tend to save on construction costs.
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The specification and condition of the available supply in Dubai Investments Park (DIP) is not uniform; therefore, leasing rates broadly vary from AED 16 per sq ft to AED 35 per sq ft, while the sales asking rates range from AED 170 per sq ft on built up area (BUA) up to AED 300 per sq ft on BUA. The standalone warehouses account for the higher rates as they benefit from high eaves height, decent electrical load, access via docked loading bays and good-quality office content. The lower rates correspond with light industrial units (LIUs) and older properties which account for approximately 80% of the stock. These rates have decreased by almost 20–30% over the past 12 months and a staggering 75% over the last four years. We have also recorded a significant increase in vacancy levels, particularly in the LIU segment of the market. Most of the newly built stock in DIP and other onshore areas does not match international standards as developers tend to save on construction costs. Thus, there remain opportunities for the right product. There are still a few high-quality Europeanspecification properties available in the market. This subsector has remained in demand despite an overall economic downturn; however, prices for industrial properties with better specifications have declined by approximately 10% on a yearly basis. In addition to lower asking rates, landlords are now offering tenants incentives such as longer-rent free periods, multiple cheque payments, and ‘rentalised’ mechanisms, such as installing air conditioning or capital expenditure (capex) fit-out allowance.
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15 10 5 0 DUBAI INVESTMENTS PARK
AL QUOZ
High PPSF* (Grade A)
JEBEL ALI INDUSTRIAL
DUBAI INDUSTRIAL CITY
NATIONAL INDUSTRIES PARK (TECHNO PARK)
Low PPSF* (Grade B - C & LIUs)
*Price per sq ft
VACANCY IN DIP BY SIZE
16%
80,001 sq ft and above
5%
50,001 - 80,000 sq ft
14%
20,001 - 50,000 sq ft
12% 10,001 - 20,000 sq ft
53% 2,000 - 10,000 sq ft (LIUs)