Property

Knight Frank report shows Grade A warehouse lease rates continue to escalate

All nine of the industrial submarkets in Dubai have experienced strong rent rises in 2022 and are currently above pre-pandemic lease rates levels

Industrial rents in Dubai have risen sharply over the last 12 months, as demand continues to outstrip supply, according to the Year in Review: Dubai & Abu Dhabi Industrial Markets Review by Knight Frank.

On average, warehouse lease rates continue to escalate across Dubai, specifically Grade A rents in Al Quoz ($15 per sqft), which have increased by 57% during 2022. In fact, all nine of the industrial sub-markets Knight Frank tracks in Dubai have experienced strong rent rises in 2022 and are currently above pre-pandemic lease rates levels.

Faisal Durrani, Partner – Head of Middle East Research, Knight Frank explained, “The industrial market in Dubai is a thriving sector that plays a key role in the emirate’s economy, accounting for circa 60% of GDP. In Dubai, specifically, the average warehouse lease rates have shown a remarkable improvement in the last 12 months as demand has risen by 17.7%. This can in large part be attributed to the government’s decisive response to the pandemic, which has underpinned business confidence.”

In late December 2022, an integrated Metal Park was launched at Khalifa Economic Zones Abu Dhabi (Kezad).

“This positivity has in-turn fuelled an increased number of new industrial market entrants, specifically the manufacturing sector which now accounts for 36% of the 12.2m sqft of demand we recorded during 2022. This was closely followed by the logistics sector, which generated 1.95m sqft of demand last year,” he added.

Knight Frank highlights factors such as the strategic location of the UAE, world-class infrastructure, pro-business policies, economic stimulus and e-commerce trends, that continue to make the UAE a world-class destination for industrial and manufacturing occupiers.

It added that the 100% foreign ownership law continues to make it possible for businesses to fully own and operate in the city’s well-established free zones without an Emirati partner; this is attracting international manufacturers not previously present in Dubai, the firm noted.

In early January 2023, dnata broke ground on a $14mn cargo warehouse in Iraq.

Adam Wynne, Associate Partner – Co-Head of Industrial & Logistics UAE, Knight Frank concluded, “2022 was another strong year for the UAE’s industrial and logistics sector as the market continues to evolve & mature. Over the last 12 months occupiers have continued to demand Grade A units with limited supply entering the market; a critical factor underpinning the resilience and performance of the sector.”

Later in January 2023, Xylem said it was opening a new facility in Dubai.

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