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Despite retaining its position as a regional logistics hub, Dubai saw average rents for industrial real estate fall throughout the summer months, according to the latest Industrial Market Performance report by Core, UAE associate of Savills. The report said the curtailed global trade volume and continuing oil price fluctuation affected demand for industrial and warehousing real estate.
“Many of the existing occupiers are trying to optimize current footprint and evaluate relocation costs while new entrants are generally cautious when undertaking their first phase expansions in the region,” said David Godchaux, CEO of Core-Savills. “This has led to a marginal release in supply, albeit mostly in the grade B category. Ready built grade A stock continues to attract tenants while large logistics requirements are purpose-built and positioned in the newer submarkets.”
The report also reported a sizeable gap in rental rates between grade A and grade B stock, which is attributed to build quality, scope for special and infrastructure expansion and ease of access.
Al Quoz saw its overall rents depreciate by 8 per cent year-on-year (yoy), while Ras Al Khor witnessed a 5 per cent dip. “Established areas such as Al Quoz and Ras Al Khor continue to witness high occupancies — although older stock and limited room for expansion is pushing rents towards a downward adjustment,” said Godchaux.
Jebel Ali Free Zone witnessed a 9 per cent softening in rentals, but the report said it continues to attract international occupiers with larger spatial requirements because of its established infrastructure. The rental range remained relatively flat between Dh32-Dh40 per square foot per year.
The new manufacturing activity in Dubai is largely positioned between the industrial zone within Dubai Investments Park and Dubai Industrial City.
Source: Property Weekly