Dubai: Industrial real estate in Dubai may not have the prestige associated with an upscale residential asset or a Grade A office unit, but investors are still getting handsome yields from such exposures.
A new Knight Frank report states that average rents for Class 1 industrial and logistics real estate in Dubai shot up 18 per cent year-on-year to Dh35 a square foot during the second-half of 2013. The popular areas for investors were Dubai Investments Park — where a major expansion is going on now — and the bellwether location for industrial realty, Jebel Ali Free Zone Authority. These two locations had rent gains of 30 per cent and 19 per cent, the Knight Frank report adds. “By comparison, rental values in Al Quoz saw a relatively moderate annual increase of 9 per cent to Dh38 per square foot,” the report says.
“Enquiries for 50,000–120,000 square foot distribution facilities rose in the second-half... however, due to high absorption rates in the preceding six months, there was little availability for units of this size.”
Food and beverage
In the first-half of 2013, interest was strongest from light industrial/manufacturing and third-party logistics firms, with the sectors accounting for 33 per cent and 25 per cent of overall enquiries. “At 17 per cent, food and beverage firms also showed a decent level of interest [up from 8 per cent in the preceding six months].”
Going forward, the options at Dubai World Central will be a key theme for investors looking at speciality assets. Dubai Logistics City, part of the DWC master-development, had strong absorption rates in recent months following the announcement of Dubai Expo 2020.
“The occupancy rate at DWC Freight Houses remains above 95 per cent, with agents reporting strong levels of enquiries for this type of airside accommodation,” the report adds.
