Dubai's industrial real estate sector is on the mend, due to strong demand growth

Dubai's industrial real estate sector is on the mend, due to strong demand growth

In the first quarter of 2022, the rental and leasing of industrial real estate in Dubai showed strong recovery growth.

With the growth of business activity in the emirate, the demand for warehouses is also growing, the number of contracts, their duration and rental rates are increasing.

Since the beginning of the year to the present day, seven of the nine local industrial real estate markets in Dubai have shown an increase in rental rates and volumes. Only two regions, JAFZA and National Industries Park, retained the previous price level, namely 47.4 and 73.2 dollars per square meter.

«Class A» premises show particularly impressive results. In the districts of the city, Al Quoz becomes a confident leader. The district shows the sharpest growth both in annual terms and in quarterly comparison.

Foreign businesses are returning to the country against the background of general economic growth, and new local businesses are also actively opening. Local and international customers are ready to conclude longer contracts for a wide variety of types of storage facilities.

Demand is being pushed by extended rental holidays, permission for businesses to open their branches outside of special economic zones without intermediaries, new visa regimes, including «golden visas» for large investors and skilled workers, as well as wide access to vaccination for both citizens and residents of Dubai.

It is worth noting, however, that one of the largest shares of consumer demand is occupied by the logistics sector: Third Party Logistics segment and a variety of logistics operators. In 2021, these organizations rented more than 148,000 square meters of industrial premises.

At the moment, the profitability of real estate for industrial use and logistics is 8.75%. If the current situation persists, we can expect a noticeable increase in this indicator.

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