Dubai Industrial Rents Rise Up To 47% In Certain Areas In Q2 2014

Industrial rents in Dubai were up 25 per cent year-on-year in the second quarter of the year, with some areas seeing up to 47 per cent growth, according to a report by property consultancy Knight Frank.

Over the past year, rental values experienced double-digit increases in seven out of the nine districts tracked, the report found. Class 2 buildings in Dubai Investments Park (DIP) recorded growth of 47 per cent, Jebel Ali saw 39 per cent growth, while those in Ras Al Khor grew 36 per cent in Q2 2014.

Class 1 buildings also saw good growth with those in DIP, JAFZA and Al Quoz recording rent rises of 29 per cent, 12 per cent and nine per cent respectively.

In DIP, while rents are rising off a low base, occupiers are attracted to the park’s strong infrastructure and fairly new facilities, said Knight Frank. In Al Quoz, the recent completion of infrastructure construction work improved the area’s connectivity, which in turn helped boost take-up of industrial property.

Overall, the report stated that enquiries for industrial property were significantly stronger in the first half of 2014 compared to six months earlier. The growth in Dubai’s retail sector was primarily responsible for stimulating demand for warehouse and distribution facilities.

Enquiries from food & beverage distributors in Dubai’s onshore locations nearly doubled in the first six months of this year as firms sought to consolidate their operations into single hub locations. Hence, a majority of enquiries were for units sized 100,000 sq ft or above.

“However, due to the limited availability of stock, leasing deals were few and far between. Not surprisingly then, value growth was fairly muted at one per cent quarter-on-quarter between April and June 2014,” the report said.

Development activity has surged in Al Quoz, Ras Al Khor and Rashidiya as older buildings in these areas reach the end of their lifecycle. However, with plots typically sized between 30,000 sq ft and 50,000 sq ft, they are likely to be too small to meet larger occupiers’ needs.

With good quality buildings in short supply, some occupiers are settling for units of lesser quality, the report added.