UAE – Mubasher: Savills, a leading global real estate advisor, said the Dubai industrial and warehousing micro-markets have witnessed challenges during the first six months of the year due to a supply and demand mismatch.
Grade A property rents fell between 4% and 6% across the emirate based on a half-yearly comparison, and Grade B rental values dropped by 8% to 10%, according to Savills’ Dubai Industrial Market report for the first half of 2019.
James Lynch, head of industrial and logistics at Savills Dubai, said: “Demand in the industrial and warehousing sectors has been subdued in the first half of 2019.
“The transactions we have seen are towards spaces that have been built-to-suit and a ‘flight to quality’ as organisations seek operational efficiencies through improved facilities. Landlords are increasingly flexible, so there are good opportunities available for those pursuing space upgrades,” Lynch added.
The global advisor expected that the Dubai Silk Road strategy, in addition to the growing prevalence of e-commerce and third-party logistics (3PL) providers in Dubai to drive demand through the second half of 2019.
The local market is going through a change in demands of the supply chain and logistics processes, the report indicated.
“The positive news is that we are predicting government initiatives, such as the Dubai Silk Road, will create uplift in demand, while private sector growth in the ecommerce and 3PL sectors can also boost performance in the second half of this year,” Lynch highlighted.
Nadia Abdul Aziz, National Association of Freight and Logistics president, said at the recent Warehouse Summit MENA that the UAE was currently the world’s the third strongest logistics market and the top in the region.
Savills also predicted the government’s Dubai Silk Road strategy to maintain the emirate’s solid global position.
The strategy will play a vital role in growing demand for warehousing and industrial space in Dubai, particularly among Chinese investors, the report highlighted.
The Dubai Silk Road strategy aims at boosting trade between free zones, the emirates, and connecting logistics services including between DP World locations across the world.
