Cluttons: Positive signs for light industrial and logistics market with new major projects in Dubai Investments Park and Dubai Industrial City

Enquiry levels are significantly up with existing companies wishing to expand or consolidate operations and new companies looking to enter the market. It is evident that confidence is returning to the sector in the Free Zone and non Free Zone environments. In the last quarter, Cluttons has worked on active enquiries totaling 100,000 square metres (1,076,400 square feet) throughout Dubai.

Dubai investments Park and Dubai Industrial City have reported strong take-up in industrial buildings in the first six months of 2012. Cluttons has witnessed particular demand for temperature-controlled facilities from logistics companies wishing to lease additional warehouses that can facilitate Fast Moving Consumer Goods (FMCG) contracts. Interest to acquire land plots throughout Dubai is showing similar positive signs; Cluttons has worked on two large land acquisitions totaling 80,000 square metres in the first half of 2012.

Rents across the region have remained relatively stable, remaining at Dhs17 per square foot (Dhs182 per square metre) per annum depending on size and specification. The last six months has also seen capital values remain reasonably stable. However, some transactions in locations such as JAFZA have pushed over the Dhs200 per square foot (2,152 per square metre) level. The notable lack of prime stock has resulted in the investment market witnessing net yields compress to 8.5%.

Cluttons predicts that in 2013 enquiries will continue at similar levels seen in Q1 and Q2 2012, and is optimistic about further absorption of the oversupplied, light industrial stock throughout the Emirate as well as continuation of demand for build-to-suit units in prime locations.