World Expo 2020 win to boost Dubai industrial and logistics sector


Dubai industrial sector continues to perform well, supported by strong economic growth and solid infrastructure. The main contributors to the growth of the industrial and logistics sector are the transportation, oil and gas, food, metal, automotive and aviation sectors.

The World Expo 2020 win is expected to boost the industrial and logistics sector in Dubai, benefiting mostly the areas located south of the city around the Expo site, such as Dubai Industrial City (DIC), Dubai Investment Park (DIP), and Jebel Ali Free Zone Authority (JAFZA).

The Expo win will also trigger significant investment in airports, roads, ports and rail, which will all benefit the industrial and logistics segment.

The Al Maktoum International Airport is undergoing an expansion of its passenger facilities and development of its cargo infrastructure. Expansion to the Dubai metro will also be fast tracked for the 2020 event, with the current Red metro line being expanded to the event site. Another infrastructure development is the creation of an integrated sea and air freight facility at Jebel Ali. The proximity of the new airport to one of the world’s largest existing seaports at Jebel Ali allows for the creation of a single free zone for the shipment of goods, acting as a major boost to the already significant re-export sector of the Dubai economy.

Another large infrastructure project that will affect the Dubai industrial market is the planned Etihad Rail. The rail network will span around 1,200 Km across the Emirates and will have a stop in DIC.

The Expo win will strengthen further the aviation sector in Dubai, as 70% of the 25 million predicted visitors to Expo are expected to travel from outside of the UAE.

The good performance of the aviation sector can be highlighted by the following facts:

  • Dubai International Airport is now the world’s second busiest airport by passenger traffic. Year-to-November passenger traffic reached 60,384,407, 15.3% more than the same period in 2012. Dubai International is also working to increase its capacity.
  • The new Al Maktoum International Airport is anticipated to be the largest in the world. It will have capacity for 160 million passengers and 12 million tons of cargo per year. The airport will start passenger flights by the end of October.
  • Emirates Airlines continues to prove itself as a worldleading airline. In 2012, the airline carried around 39 million passengers and 1.8 million tonnes of cargo.
  • The Dubai ports have also been contributing strongly to the growth of the industrial sector:
  • Jebel Ali sea port opened its third terminal that will increase its capacity to 19 million TEU* a year. By 2014 Jebel Ali is expected to be the biggest port in the Middle East
  • DP World handled 26.6 million TEU across its global portfolio in the first half of 2013.

Industrial supply & demand

Activity in the industrial market continues to be strong in Q4 2013, especially in the new industrial areas and the free zones.

Given the high demand in the newly developed locations such as DIC, DIP or Dubai World Central (DWC) and the free zones (JAFZA and DAFZA), those areas are expanding and developing their facilities.

DAFZA has started its third-phase expansion while DIC (which is 95% occupied) will begin an expansion in 2014 with new warehouses, infrastructure and housing planned.

The new areas capitalise on their large plots of land to attract heavy industries such the automobile sector. DIP for example has recently opened a new car showroom for both new and used cars and have around 14 automobile vehicle outlets and repair facilities, in addition to a number of service centres, workshops, spare parts and accessories outlets.
JAFZA is also trying to impose itself as an automotive centre by attracting Chinese and other Asian automotive companies. JAFZA counts today more than 500 automotive companies such as Honda, Nissan, Ford, etc.

A large number of enquiries for industrial space continues to emanate from food & beverage (F&B) companies.

With the traditional onshore areas such as Al Quoz or Ras Al Khor being saturated and ageing, the trend continues to shift towards the newer areas such as Dubai Industrial City (DIC) and Dubai Investment Park (DIP) and the free zone locations such as the Jebel Ali Free Zone Authority (JAFZA) and Dubai Airport Free Zone Authority (DAFZA).

Dubai industrial zones are being the centre of interest of a number of international companies, mainly from China, the USA, Switzerland and others.

The Expo win will reinforce Dubai’s position as a key economic and industrial hub and will benefit mostly the new locations such as DIP or DIC which are located near the exhibition site. More companies might be setting up their businesses in these areas soon, creating more need for shipping and logistic solutions.

Industrial performance

The industrial sector is considered one of Dubai’s most resilient real estate markets, with rates remaining stable due to the lack of speculation in the market.

Rental rates in completed industrial units in Dubai currently vary significantly from one area to another, with no real standardization of logistics facilities.

Excluding the freezone areas such as JAFZA and DAFZA, the areas located in the older part of Dubai like Al Qouz, Al Qusais and Ras Al Khor continue to command high warehouse average rents, despite the lower quality of their stock and the relatively underdeveloped infrastructure systems. Completed units in newer but more peripheral locations (such as DIC and DIP) have started to offer higher average rents as they are seeing increasing demand.

Land is typically leased from the relevant authority for a term of 15, 25 or 30 years, on renewable terms. On occasion, TECOM has provided land on a 99-year leasehold basis.

Although hypothetically land sales are permitted to GCC nationals in free zones, the typical practice observed in the market is long-term leasing.

With trade activity strongly picking up in Dubai and the recent Expo 2020 win, the industrial market is expected to benefit accordingly and areas located towards the South of Dubai and in proximity to the Expo site (e.g. DIC, DIP, JAFZA) are projected to see higher rates in the future and stronger demand.


Please enter your comment!
Please enter your name here