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Savills, a global real estate services provider, said Dubai’s industrial and warehousing sectors continued to be active, with strong demand levels and stable leasing activity across sectors.
The oil and gas industry leads demand, followed by e-commerce, contract logistics and indoor farm operators, Savills said in its Dubai Industry H1 2022 market report.
E-commerce operators, whose activities accelerated in the wake of the pandemic, have further expanded their operations as they continue to gain market share in Dubai’s entire retail sector.
In the first half of 2022, their real estate footprint expanded significantly in the form of “dark stores,” typically smaller warehouse units designed to deliver everyday items on short notice.
“The recent surge in oil prices and subsequent revenue growth has led to increased investment and capacity expansion by engineering and other oil and gas support services companies,” said Swapnier Pillay, associate director of Middle East research at Savills.
“Another demand driver is the growth in the number of vertical farm operators, especially in the past 6-12 months, driven by increased consumer demand for local produce and a drive towards self-sufficiency and reduced reliance on foreign food imports,” Swapnier added.
Demand in the first half of 2022 is concentrated in traditional hotspots such as Dubai South, JAFZA, National Industrial Park (NIP) and Dubai Investment Park (DIP).
Rental values remained stable, with rents rising across multiple submarkets, driven by strong growth in leasing activity and enquiry levels.
Due to the limited availability of Class A shares, rental increases for Class B shares were more prominent in some micro-markets, where offers rose as demand spilled over into the segment. Rental values rose by an average of 4-9% compared to the second half of 2021, according to the B-rated stocks of NIP, Al Quoz and Jebel Ali Industrial.
Luke Tipp, commercial agent for Savills Middle East, said: “The overall feedback we have received from our landlords has been positive. Most of them are reporting improved occupancy rates and show an encouraging outlook for the industry. “
“Going forward, end-user demand for logistics assets that offer temperature-controlled spaces and are compatible with new automation technologies is likely to remain strong,” Tipp said.
“There is strong interest from tenants in facilities with high electrical loads, especially manufacturing. We expect sectors such as e-commerce, contract logistics, engineering and manufacturing to remain active and continue to drive demand throughout the second half of the year,” he added.
According to Savills, inquiries from international investment funds and family offices to acquire industrial and warehousing assets have also continued to increase, with a focus on income-generating assets.
It added that investors are considering facilities with high-quality logistics specifications to ensure tenants are secured from busy growth sectors such as e-commerce, pharmaceuticals, contract logistics and FMCG (fast-moving consumer goods).-TradeArabia News Service
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