Dubai, United Arab Emirates

Supply continues to outweigh demand, but landlords align price points with occupier budget: Cavendish Maxwell 2019 Industrial and Logistics Report

• General trading sector remained the most active, accounting for almost 35% of all enquiries
• Significantly more enquiries for facilities over 100,000 sq ft built-up-area in 2019
• Vacancy levels expected to taper off in 2020 as demand gathers steam

Leading property consultancy and chartered surveying firm, Cavendish Maxwell, has released its Industrial and Logistics Report for 2019 for Dubai. The report offers a comprehensive and unique outlook on Dubai’s overall competitivity as a logistics hub, the infrastructure available, supply and demand, and market sector opportunities for growth and investment. The report was compiled by the firm’s in-house Investment and Commercial Agency team, drawing data from its in-depth industry knowledge, in collaboration with its extensive client and partner portfolio.  

Commenting on the report, Andrew Love, Partner and Head of Investment and Commercial Agency at Cavendish Maxwell, said:

“Supply continued to outweigh demand in 2019. Increasingly more landlords are having to align price points with occupier budgets resulting in transactions continuing to take place despite a rise in vacancy levels. The gap in the local two-tier segment remains to be filled as occupiers continue to exert demand-side pressure on the limited Grade A stock while traditional warehouses struggle to attract interest. For this year, we expect lower vacancy levels as demand gathers steam.”

Key sector insights

The general trading sector remained the most active accounting for 35% of all enquiries. The logistics and distribution sector, typically the second greatest source of demand, halved to 7%, whilst manufacturing jumped, taking a 14% share.          

Our data illustrates markedly more enquiries for facilities over 100,000 sq ft built-up-area in 2019. This has largely been driven by upscaling exercises to improve efficiency, speculators capitalising on discounted prices, and a wave of foreign direct investment (FDI). China is front lining the international commitment to the wider MENA region with several sizable requirements, with Chinese companies entering the market at levels not seen previously.

Real Estate Investment Trusts (REITs), and high net-worth individuals continue to show strong appetite for investment in the industrial and logistics sector. However, barriers remain in the form of onerous land lease terms and expensive lease rates of the plots upon which industrial properties are built, in addition to the high transfer fees and sublease charges, which are typically passed on to the tenant.

Increasingly modern facilities, which are in relatively high demand, will be resistant to further increases in vacancy levels with some of this space likely being absorbed due to the absence of speculative new-builds. In comparison, older stock nearing the end of its lifecycle is likely to remain in the market.

For more detailed information and the complete market outlook download your copy of the 2019 Industrial and Logistics Report here:

To read the full report, download your copy here: