Occupiers seek higher quality accommodation on more flexible terms
Latest Research
Since our Dubai property market update went to press in July 2011 we have been through what is traditionally the quiet time of the year for the UAE, further enhanced this year by the coming together of the traditional leave month of August and Ramadan.
Throughout the last quarter, Bahrain has continued a fragile recovery towards political stability after the period of anti-government hostilities witnessed in the first half of the year.
Quarter 3 is traditionally the quiet time of the year for the UAE, further enhanced this year by the coming together of the traditional leave month of August and the Holy month of Ramadan.
Rents for the higher quality logistics facilities remain unchanged in the main logistics and industrial areas for the first half of 2011, and the two tier market is beginning to be separated by a greater divide according to research by Knight Frank.
The absorption of poorer quality warehouse and logistics accommodation continued to flat line in 2011 as owner occupiers are continuing to build their own bespoke logistics facilities to higher standards use ignoring the vast availability of speculatively developed accommodation.
The flight to quality continues as logistics accommodation in Jebel Ali Free Zone and Dubai Investments Park that was built to a higher quality during the boom years of 2007-2008 continues to out perform poorer quality stock.
Higher quality facilities in Jebel Ali Free Zone are now achieving rents of circa 30-45% greater than neighbouring speculatively developed poorly designed facilities.
Rents will continue to fall for lesser quality facilities across Dubai . However, as landlords and landowners become more flexible with occupational terms , rents for high quality facilities will buck the trend and rental growth will be witnessed going forward.
With development works beginning on several owner occupier schemes and the recent completion of the 420,000 sq ft Aramex facility at Dubai World Central, the request for higher quality logistics accommodation in strategic locations by logisticians looks to be being answered.
Edward Batten, Commercial Leasing Manager for MENA Logistics and Industrial at Knight Frank said: “The logistics property market has performed poorly over recent years, however with renewed enthusiasm from landowners and landlords to be more flexible with multi-national occupiers, and the completion of better quality accommodation, we may see some increase in rents in the top half of the market.
“However, with a proposed delivery of new smaller light industrial units at DIP during Q4 of 2011, in addition to the large amount of existing vacant stock throughout Dubai, we will continue to witness downward pressure on the lower end of the market."
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