Warehouses and land: industrial property in southern Dubai and Abu Dhabi
Little is said about UAE industrial property, and yet it is a segment with clear economics and long tenants. What feeds it, and the three strategies people use.
Little is said about industrial property in the UAE, and yet it is a segment with clear economics and long-term tenants. Here is what feeds it.
What creates the demand
- Jebel Ali Port — the largest in the region: 134 km² of territory, 67 berths.
- Al Maktoum airport, with around $35bn allocated to its expansion.
- The adjacency of a port and an airport in one logistics node is a rare configuration, and it is what drives demand for warehouse space.
- Industrial zones around them: Dubai Industrial City, Dubai Investment Park, Jebel Ali Industrial Area.
Ways in
Buying land and building a warehouse. A reference point from an actual listing: a plot of 7 473 m² (80 436 ft²) in Dubai Industrial City, fifteen minutes from Al Maktoum airport, with permission for warehouses and cold storage — AED 4m. The permission can be changed to light manufacturing if needed.
Abu Dhabi industrial zones. In the largest industrial cluster near Khalifa Port, plots were offered on a "purchase plus long lease" basis: around $44 per square metre to buy and roughly $5.2 per metre a year on a fifty-year lease, from 2.8 hectares.
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Three strategies and their logic
- Build and sell a warehouse — earning the development margin.
- Build and let — payback of around three and a half years on the selling side's numbers; test it against actual Grade A warehouse rents in the zone.
- Resell the plot — earning on an early entry price.
All three yield figures in offers like these are the seller's calculation. They have to be checked against warehouse rents in the specific zone and a construction estimate, not taken on trust.
How this segment differs from offices
The tenant here is operational: a logistics company, a distributor, a manufacturer. Leases are long, the requirements on the building are utilitarian (height, doors, floor loading, access roads), and sensitivity to the prestige of a location is minimal. The entry threshold, on the other hand, is higher, and so is the dependence on a single occupier.
In the news
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