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Warehouse rents jump by 38% in Jebel Ali in H1 2024 as supply tightens

Warehouse rents jump by 38% in Jebel Ali in H1 2024 as supply tightens

Knight Frank recorded a 185% rise in industrial and logistics demand in H1 2024 in Dubai to 18 million sqft

Press Release

July 21, 2024

Manufacturing, construction, and logistics were Dubai’s top three sources new industrial demand in H1

Dubai: The UAE industrial and logistics sector continued to exhibit strong growth in H1 2024, with the highest rental growth being registered in Jebel Ali Industrial (Grade B) (38.5%) (AED 36 psf), according to the H1 2024 Dubai & Abu Dhabi Industrial Markets’ Review by global property consultant Knight Frank.

Maxim Talmatchi, Associate Partner- Co-Head of Industrial & Logistics, UAE explained: “The industrial and logistics market demonstrates robust fundamentals, characterised by strong demand, minimal vacancies, and a promising pipeline of upcoming projects as developers respond to the rising level of demand”.

Separately, since the beginning of the year, there has also been growing interest from institutional investors from the USA, China, and Europe. With yields standing at around 8.25%, the sector remains very attractive on the global stage.

GROWING DEMAND AND SHRINKING SUPPLY

During H1 2024, Knight Frank recorded almost 18 million sqft of new requirements for industrial and logistics assets, representing a 185% increase on H1 2023.

Mikhail Vereshchagin – Associate Partner, Industrial & Logistics, UAE,commented: “There’s a noticeable shortage of high-quality industrial and logistics space in the UAE, especially in Dubai. As the Dubai Industrial Strategy 2023 aims to make Dubai a global industrial hub, there is an urgent need to develop new high-quality stock.”

The top sectors contributing to the demand are manufacturing (11.7%), construction (11.1%), and logistics (10.2%), which collectively account for a third of total demand.

Aliaa El Esaaki – Research Manager, explained:“There is a severe shortage of new warehouses in Dubai, which is resulting in demand spilling over to other emirates such as Abu Dhabi and Al Ain. In fact, we are tracking just 660,000 sqft of new supply that is due to be delivered this year. The gulf between demand and supply is clearly highlighted when you consider that the total level of new requirements during H1 alone stood at 18 million sqft.”

Knight Frank estimates that Dubai will see 660,000 sqft of new supply in 2024, spread across JAFZA (360,000 sqft) and Dubai Industrial City (300,000 sqft). An additional 1.3 million sqft is expected in 2025 in National Industries Park, Dubai South and Dubai Investment Park 2.

Adam Wynne, Partner – Head of Commercial Agency, Dubaicommented: “The shortage of supply, coupled with sustained demand has continued to drive upward pressure on rents and capital values. As Dubai, and the UAE, remain attractive due to their pro-business environment and desirability as a place to live, we expect this trend to continue while developers race to introduce new supply to fill the gap.”

ABU DHABI’S INDUSTRIAL MARKET

KEZAD Group (Khalifa Economic Zones Abu Dhabi), which represents 55% of the UAE’s industrial supply, has also seen robust demand for warehousing products. In Q1, occupancy rates reached 88%. Additionally, KEZAD witnessed a trend towards longer lease commitments, with the average lease length increasing to almost 6 years from around 4 years in 2022.

General warehouse rents across the 12 economic zones in KEZAD range from AED 320 to 450 psm, while cold store rents range from AED 350 to 550 psm.

About Knight Frank:

Knight Frank LLP is the leading independent global property consultancy. Headquartered in London, the Knight Frank network has 487 offices across 53 territories and more than 20,000 people The Group advises clients ranging from individual owners and buyers to major developers, investors, and corporate tenants. For further information about the Firm, please visit www.knightfrank.com.

In the MENA region, we have strategically positioned offices in key countries such as the United Arab Emirates, Saudi Arabia, Bahrain, Qatar, and Egypt. For the past 13 years, we have been offering integrated residential and commercial real estate services, including transactional support, consultancy, and management.

Understanding the unique intricacies of local markets is at the core of what we do, we blend this understanding with our global resources to provide you with tailored solutions that meet your specific needs. At Knight Frank, excellence, innovation, and a genuine focus on our clients drive everything we do. We are not just consultants; we are trusted partners in property ready to support you on your real estate journey, no matter the scale of your endeavour.

For all Media and PR inquiries, please contact:
Roksar Kamal, PR & Communications Manager
Roksar.kamal@me.knightfrank.com

Let’s connect socially – find us on LinkedInInstagram, and Twitter. For more information and to explore how we can be your partners in property, please visit our website at https://www.knightfrank.ae

Source
https://www.zawya.com/

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