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Dubai World Central (DWC) is directly linked to Jebel Ali Port via a dedicated logistics corridor. The 200-sq-.km single customsbonded free zone provides businesses with access to more than 6,400 registered companies, including over 120 of the Fortune SOO companies registered within the zone. lfs also directly linked to the UAE's main transemirates highways, the future Etihad Rail network and AI Maktoum International Airport.
Within DWC, the Logistics District is a world of shared warehouses and dedicated plots for freight forwarders. It offers plots for logistics businesses and integrator facilities, including light manufacturing, office and commercial buildings for lease. and is home to companies
such as Aramex, DB Schenker, Hellmann, Kuehne + Nagel and Panalpina. The district, which opened with 60,000 sq m of space, has grown to 600,000 sq min five years.
Mohsen Ahmad, Vice President of Logistics District at DWC, talks to PW about investment opportunities and why banks are currently reluctant to offer longterm financing to investors.
When we think of Logistics what comes to mind is vast open rooms with visible ducts and conusated Iron ceilings. What Is today's version?
We didn't just do a warehouse but went and created a warehouse with a retail mix, so it would have restaurants, cafes, meeting rooms - it almost has a community or a business centre feel to it.
For example, we have created battery charging areas for forklifts. We have offices for supervisors and their teams. We looked at the layout of the racking system and made sure it is in line with worldwide best practices.
We have loading bays for the trucks to back up into and hydraulic dock levers - if you get trucks of di1Jerent sizes you can operate a forklift in and out. The offices overlook warehouse operations and the loading and unloading facilities. So details are important.
How do you typically build and operate? Can Investors buy plots and develop them?
As a free zone we're very specific about who operates in our facility. Every customer who wants to take up a lease on the land would need to give us a detailed business plan before we approve it. We have a very specific mandate on what we are looking for and are end user-focused.
We offer plots and purpose-build facilities for use by each sector. We have facilities for the pharma sector, garment distribution, perishables as well as freight forwarding. We have general facilities but also very specific ones. We work with regulators such as customs and Dubai Municipality, so we allow our investors to have these solutions.
There are certain guidelines when the investors develop - the plot area ratio, the size and height they can build. But overall we accommodate whatever makes business sense. We have warehouses as short as 12m in height and some that are as high as 35m.
What Is driving your revenues- properties you have built or those that Investors lease from you?
The first five years have been focused on our investors and partners building their facilities. That has been the main growth area. In the coming year we're going to balance the revenue between these and facilities that we develop on our own to lease. We're very interested in having a so-so balance in the next five years.
Right now the balance is in favour of investors. We wanted to make sure we had the right portfolio. For example, lkea has a build-to-suit facility, where we had a joint venture with the developer investor to build that facility. As a regional hub serving the GCC, it's 101,000 sq m. which is equal to 14 Wimbledon stadiums. We built [it] for them specifically. That shows our confidence - we are ready to put our money in the project because we believe in our success.
How would you evaluate the past five years?
2009 was not the best of times for the global economy. But that is always Dubai - we build, we take risk and [build the] infrastructure.
In 2010, AI Maktoum International Airport opened. The government looks at these things as a [part of a] futuristic vision. That became a key element for our success. The growth has been above our expectations.
What are the challenges facing the logistics sector?
We"ve established enough infrastructure for such investments. What is lacking is the financial sector's understanding of this sector in the region.
Many banks look at these projects as property finance, as opposed to project finance. Some banks are asking for a seven-year payback, whereas these warehouses look at a 25-year or higher life cycle and they like to amortise the amount throughout the life of the product- 20, 25, 30 or 40years.
Logistics is a cash flowdriven business as opposed to one with a high profit rate margin. A seven or tenyear repayment [period] is relevant for real estate rather than industrial development.
If things from the financial or banking sector are rectified, we would see a better appetite from customers and investors to build more facilities themselves.
What ara your plans? Which sectors do you think will drive growth?
We believe in zoning, which allows us to have clusters. In the pharmaceutical segment, we have a number of pharma and life science companies. We believe that if they are in a cluster, it gives synergy and the regulatory components are taken care of. It allows us to have enablers. For instance, having related companies such as dry ice for life sciences or packing material companies for freighters. In the thirdparty logistics sector, we have enablers, cargo owners and freight forwarding. The segments that we are focusing on after a lot of study are perishables, life sciences, fashion, IT and telecoms, critical spare parts, and oil and gas.
India is the next big market. I think we need to do more to attract that. Africa is a growth area as well. The Commonwealth of Independent States are important countries. They are land-locked and we have the best airlines in the region [to serve them].
Source: Shalini Seth, Special to PW