Dubai’s industrial warehouse market witnessed remarkable growth during the third quarter of this year, driven by increased demand, business expansion and the influx of new companies into the emirate. The ValuStrat Industrial Capital Values Price Index recorded a significant increase.
It reached 143.4 basis points in Q3 2024 compared to 100 basis points in Q1 2021, and expectations continue to point to a promising future for this sector in light of positive market conditions, despite current supply challenges.
ValuStrat Global’s Warehouse Price Index recorded annual capital gains of 14.6% and quarterly capital gains of 5.2%.
The value of a typical logistics warehouse in Q3 2024 was around AED 3,009 per square metre (AED 279 per square foot). In terms of annual performance, Al Quoz, Dubai Investment Park and Jafza areas stood out with increases of 22.5%, 18% and 17.2% respectively.
Warehouse rental rates ranged from AED 205 per square metre (AED 19 per square foot) to AED 850 per square metre (AED 79 per square foot). While less expensive warehouses remained unchanged, rents for high-spec warehouses rose by up to 3% during the third quarter.
Improved demand
Demand continues to improve driven by positive market conditions, expansion of existing companies, and the influx of new companies to the region. However, the market faces challenges in providing high-quality inventory due to the reliance on self-development and the lack of risky construction projects by developers, despite recent expansion announcements.
Demand is expected to exceed available supply, and a potential interest rate cut could further boost demand, supporting continued price increases in the market.
Investment partnerships
Dubai is witnessing a remarkable boom in the field of logistics and industrial development, as many companies are moving towards establishing strategic partnerships aimed at enhancing the efficiency and capacity of the region’s infrastructure.
In this context, several important projects were announced that reflect Dubai’s commitment to strengthening its position as a global centre for trade and logistics, starting with the development of a first-class logistics zone with an area of 144,000 square metres, and ending with the establishment of the largest logistics centre in the world for food trade.
These initiatives demonstrate the ongoing efforts to support economic growth and enhance competitiveness, as various companies, including real estate and industrial companies, seek to invest significant resources in new projects, reflecting confidence in the future of the logistics and industrial sectors in Dubai.
Projects
Among the most prominent of these projects announced during the recent period is the entry of “Aldar Properties” and “DP World” into a strategic partnership to develop a first-class logistics area with an area of 144 thousand square meters (1.55 million square feet) in the National Industries Park in Jebel Ali.
Dubai Municipality and DP World also signed an agreement to establish the world’s largest logistics centre for food trade, doubling the size of the fruit and vegetable market.
Ozone Pharmaceuticals has signed an agreement to build a 14,000 square metre (150,700 square foot) plant in Dubai Industrial City, with an investment of over AED 293 million. The facility is scheduled to be fully operational by next year.
Jebel Ali Free Zone (Jafza) and Eaton have partnered to build a 46,452 square metre (500,000 square foot) sustainable campus in Dubai, scheduled for completion in 2026, which will include a research and development centre focused on sustainable manufacturing, energy management and artificial intelligence.
Oscar Middle East has started work on a Dh150 million bulk liquid terminal in Jafza. The two-phase project will see the first phase operational within 16 months, followed by additional storage space in the second phase.
For a detailed perspective on the property market, visit: Dubai - VPI Residential Capital Values - November 2024
