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In Dubai, industrial realty is running hot

2016-11-16 09:21:47

The massive Dubai Industrial Park is intent on maintaining the hot pace

  • The Park’s premise to investors and tenants is built on that relatively simple formula of being the hub of firImage Credit: Dubai Industrial Park
  • Saud Abu Al ShawarebImage Credit: DIP

Dubai: Industrial and commercial real estate in Dubai is proving an investor’s delight. Which is even more remarkable given that in a relatively soft economy, it is the one realty asset that is more likely to feel the maximum heat.

But while the city’s residential and office properties have taken quite a bit of heat from investors, industrial keeps on beating an upbeat tune. That certainly serves Dubai Industrial Park’s interests just fine.

With easy access to the Al Maktoum International and the other clusters that will together form the 145-square kilometre Dubai South, the Park is building up its base even through the current headwinds.

“We faced a minor drop in occupancy on the warehousing side ... but we see that as part of a correction in the market,” said Saud Abu Al Shawareb, Chief Operating Officer of DIP. “At the same time we are getting good inquiries for new leases.

“Just last month we did around 80,000 square feet of warehouse [leasing]. That’s why I am calling it as correction — some people are downsizing or closing their companies, but at the same time we have new investors who want to centralise their operations.”

The Park’s premise to investors and tenants is built on that relatively simple formula of being the hub of first choice to consolidate their distribution and logistics needs. They could do that by shifting from an existing base they may operate within the UAE or the wider region.

“As Dubai Wholesale City — of which we are a part — and DIP we are in the centre of two big developments,” the CEO said. “We’re 10 minutes away from Maktoum International Airport and around 15 minutes from Jebel Ali Port.

“Having that high-end infrastructure and connections to Emirates Road is a big attraction for investors. Emirates Road connects you to Abu Dhabi and Saudi Arabia and also connects you to Oman and the Northern Emirates.”

As of now, the Park — which is not a free zone — builds the warehouses and other assets tenants/investors want. There are no plans to set aside dedicated areas for third-party investors for them to develop what they want and then lease them out. (Such BOT (build-own-transfer) ventures have proved popular at some of the other industrial parks in the city, especially with investors seeking longer term — and stable — yields.) “Since we have six zones for each industry and based on the land, building or factory requirement of the investor, we allocate the land,” the COO said. “Because we don’t want to secure ready land and then have to wait for tenants to come. It’s better for us to lease.”

Leases — based on Sharia agreements — can be had for up to 30 years, depending on investor preferences.

There are no plans to create a direct road corridor between the Park and the airport and port facilities. “It won’t make much sense to us or our tenants,” the COO said. “Because that dedicated road is good for free zone companies, but we’re mainly focusing on non-free zone entities, which are local and GCC companies.”

The Park as of now hosts 700 companies, and with 170 factories currently operational or under construction.

On whether being a new entity requires it to be aggressive on the rates, Al Shawareb said: “Until today we are maintaining our pricing — which is the average of what you see in the market these days. If you compare our pricing with Jebel Ali Free Zone, we are neck-to-neck and can even go as higher.

“We are within the rate of the market in terms of warehousing and on the land.

“For us, it does not matter if we are a free zone or a non-free zone; at the end of the day the investors are getting established in Dubai,” said Al Shawareb. “They are creating business advantages in Dubai. So, if you take this at the Dubai level, be it a free zone or non-free zone, at the end of the day it still in Dubai.”


The sum of many parts


Dubai Industrial Park is built around:

* Six zones dedicated to industries such as base metal, food and beverage, minerals, chemicals, machinery and equipment, and transport. The area is served by a road network stretching to 90 kilometres. All of the road and allied infrastructure are to be delivered by April next.

* It is a designated “district” within Dubai Wholesale City. Apart from the manufacturing units and warehouses, the Park also has labour and staff accommodation areas.

* Automotive dealerships are also taking a fancy to the location, either for after-sales facilities or even for tracks to test out their models.


( courtesy of GulfNews )