There is strong demand for high quality warehousing and logistics facilities in the UAE and occupiers are seeking both onshore and free zone ‘build to suit’ developments, said a report.

However, they are facing limited supply, particularly in the larger, 50,000 sq ft plus range, added the first quarter report for the UAE’s industrial and logistics market by Cluttons, the real estate specialist.

The Abu Dhabi Executive Council has announced ambitious plans to develop the infrastructure of the Emirates including 246 km of new road projects, including the expansion of the Emirates Road between Dubai and Abu Dhabi. Further funding is being poured into industrial zone expansion in Kizad and AutoCity, the report said.

Kizad is set to become one of the world’s largest projects of its kind, centred around one of the most sophisticated port hubs – Khalifa Port, according to the report.

The first phase of the Port Development and Kizad Area A is due for completion in the fourth quarter of 2012 with further serviced land currently available and the initial pre-built warehouses being completed in the first half of 2013.

Phase 1 of the pre-built warehousing scheme will include both free zone and non-free zone entities.

The price of oil has remained high, which is reflected in strong demand driven by the GCC petrochemical industry and oil and gas suppliers leading to two further industrial zones being announced in the western region of Abu Dhabi as centres for chemical, petrochemical, building and logistics.

In Dubai, traditional areas like Al Quoz and Ras Al Khor have maintained strong demand and consistently achieve higher rents than the more recently developed areas. The lack of larger units in the Emirate has driven expansion in other areas.

Overall Dubai’s industrial rents split into a small unit market where levels have reduced since Q1 2011 from Dh21 ($5.71) to Dh17 ($4.62) per sq ft with large amounts of stock being introduced by Dubai Investment Park and Dubai Industrial City, the report said.

The larger, higher quality unit market has seen rents holding Dh25-35 per sq ft depending on quality and location with Jafza units remaining at Dh60-70 per sq ft. – TradeArabia News Service