MOMENTUM remains in the UAE industrial property market with steady rates and growth throughout the country, real estate consultancy Cluttons says.

According to its Q4 2013 report, the industrial market was bolstered by an improved economic climate, the successful win of Expo 2020, and the launch of passenger services at Al Maktoum International Airport, following the June 2010 inauguration of the airport as a cargo hub.

Steve Morgan, head of Cluttons Middle East, says: “Steady growth following the win of Expo 2020 is inevitable, with a rise in demand for space surrounding the Expo 2020 site already starting to materialise. Facilitating this gravitation of business and industrial activity is the Government’s ramping up of critical infrastructure projects across the city as Dubai readies itself for the Expo in six years’ time. We are already seeing several players make moves to establish an early presence in the area as they position themselves to benefit from the projected upturn in overall business activity in areas south of Dubai.”

The expo is set to play an integral role in facilitating the ongoing evolution of Dubai’s tremendous aviation and logistics infrastructure. These sectors, which form a key component of the city’s industrial capabilities, are likely to underpin requirements and growth across Dubai’s industrial landscape in the short-medium term. This will in part be linked to the on-going growth and expansion of the facilities at Al Maktoum International Airport. While Dubai International Airport emerged as the world’s second busiest airport by passenger traffic last year, the aggressive expansion plans being developed for Dubai World Central will increase the attractiveness of industrial areas close to the new airport, which is positioning itself as the premiere global integrated logistics hub, Cluttons observes.

Morgan: improved economic climate helping sustain property market momentum

Industrial market rents in both Abu Dhabi and Dubai have grown steadily throughout the second half of 2013. Khalifa Industrial Zone Abu Dhabi (Kizad) is appealing to some tenants as a place to relocate, with most attracted by the prospect of expansion. Rent-free periods, in addition to 50 year (musataha agreements) leases go further to enhance Kizad’s allure. There has been particular interest from logistics companies and manufacturers, who are drawn to these factors and the low operation costs.

Back in Dubai, Cluttons’ latest visual data material depicts that rent on average stood between Dh28 ($7.6) and Dh40 psf during the fourth quarter last year, throughout the emirate’s onshore submarkets, which includes Al Quoz and Ras Al Khor. However, new entrants and international companies are moving towards other submarkets, such as Dubai Investment Park and Dubai Industrial City. These areas are now being viewed as alternative onshore destinations for development. Availability of space and cheaper land values is proving to be a big draw for this group of occupiers. “We have noted a marked upturn in the demand for industrial space over the past six to 12 months, with food preparation facilities for hotels and the food and beverage sector being a key contributor to overall requirements as the emirates hospitality and leisure sector expands further,” says Morgan.

The official concludes: “Occupiers across the UAE are being drawn more and more to ‘built to suit’ options, rather than existing facilities, as a result of the lack of stock that is readily available in the areas they want to be to the specification they require.

“Overall, the improved economic climate and recent accomplishments of the UAE are enabling the momentum to sustain the industrial property market.”

Cluttons LLP is an independent partnership of chartered surveyors founded in 1765, with a network of offices in the Middle East, Europe, and South Africa. In the Middle East, its offices are located in the UAE, Oman and Bahrain.

It offers a range of professional property management, agency and consultancy services across the commercial and residential sectors for both investors and occupiers.