DUBAI, UAE — The supply of under construction warehouse stock in Dubai’s industrial market stands at 1.56 million square feet according to Knight Frank’s latest report: Dubai & Abu Dhabi Industrial Markets Review, Q3, 2023.
According to Knight Frank, demand is outstripping supply and occupiers are faced with the prospect of leasing more secondary stock, while others are gravitating towards locations in Abu Dhabi, which is benefiting from spillover demand.
Across the six primary submarkets tracked by Knight Frank in Abu Dhabi, rents have remained unchanged thus far during H2, a press release said.
High occupancy levels in KEZAD and Masdar have helped to sustain rents.
Knight Frank also reports a rise in demand in ADAFZ, where space is available for AED 600 per square metre.
To cater to burgeoning demand, ADAFZ is developing a new masterplan, Al Falah Free Zone, spanning over 6 square kilometres, which will include both bonded and non-bonded zones.
Dubai recorded 9.9 million square feet of new requirements during Q1-Q3 2023, according to Knight Frank. The logistics sector dominates Dubai’s demand, accounting for 44 percent of new requirements, followed by the manufacturing & industry (16 percent) and technology sectors (13 percent).
In Abu Dhabi, new industrial and logistics space requirements grew to 350,000 square metres during the first nine months of 2023, a significant 94 percent increase on the same period in 2022.
Maxim Talmatchi, Associate Partner, Co-Head of Industrial and Logistics says:“Demand has been strong this year and we have worked with several new market entrants from Asia Pacific, CIS countries, Turkey, and India.”
Knight Frank’s report also highlights that while warehouse lease rates in Dubai have remained stable thus far during H2 2023, Grade B rents in JAFZA (AED 25 per square foot) and Dubai Industrial City (AED 32 per square foot) have risen by 25 percent and 19 percent, when compared to the same period last year.
Similarly, Al Quoz (Grade A), has seen rents climb to 52% above January 2020 levels, marking it as the most expensive warehouse leasing location in Dubai.
Faisal Durrani, Partner – Head of Research, MENA, said, “The transformation of Al Quoz continues. With lease rates here at AED 58 per square foot, retailers, many of whom are fitness and wellness businesses, cafes and art galleries are continuing to snap up warehouses for use as retail premises, adding to the boho vibe that has become entrenched in this part of the city.”
According to Knight Frank, Dubai is experiencing a significant influx of institutional investments from the United States, influenced by the UAE’s strategic location, e-commerce growth, and the need for efficient supply chain solutions.