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UAE’s Rising Profile in Warehousing Costs

Dubai and Abu Dhabi have attained notable global rankings in storage expenses, ranking seventh and fourteenth, respectively.

Dubai and Abu Dhabi have achieved prominent global rankings in warehousing costs, securing the 7th and 14th positions, respectively. 

This highlights the growing significance of the United Arab Emirates (UAE) as a key player in the global logistics industry, according to experts.

Rising Costs Driven by Limited Supply and High Demand:

The robust demand for warehousing, coupled with limited supply, has led to a substantial increase in total warehousing expenses, as indicated in a study by Savills.

The study, which monitored 52 global markets over 12 months, reveals that prime warehousing rents in Dubai stand at $20.48 per square foot, while in Abu Dhabi, they are $13.36 per square foot.

UAE’s Role in Logistics and Warehousing:

Dubai and Abu Dhabi’s high rankings underscore the UAE’s pivotal role as a regional and global player in the logistics and warehousing industry. 

This contributes to attracting investments, generating employment, and enhancing the nation’s economic and international standing, as highlighted in Savills’ study.

Record Demand for Industrial and Logistical Space:

The first half of 2023 witnessed record-breaking demand for industrial and logistical space in Dubai. 

This surge was driven by companies relocating their operations to Dubai, a trend known as near-shoring. 

Additionally, increased local manufacturing, resulting from the UAE’s industrial strategy, Operation 300bn, has further fueled demand for logistics and industrial space, leading to job creation and economic diversification.

Escalating Warehouse Lease Rates:

In 2022, warehouse lease rates continued to rise in Dubai, with Grade A rents in Al Quoz increasing by 57%. All industrial submarkets in Dubai experienced strong rent growth during 2022.

Savills’ study reports that across the markets analyzed, total costs for prime warehousing space, encompassing rents, service charges, and taxes, increased by 10.1% in the 12 months leading to June 2023.

Slower Cost Increase in H1 2023:

However, the pace of cost increases has slowed, with a 4.4% increase in total costs in the first half of 2023, compared to 5.4% in the second half of 2022. 

This deceleration is attributed to rising vacancy rates and increased supply in the market.

Globally, London leads in warehousing costs at $42 per square foot, followed by Los Angeles, Sydney, Hong Kong, Northern New Jersey in the US, and Tokyo.

Strong Performance in Industrial and Logistical Space:

A Savills study from August of the same year highlighted the remarkable performance of Dubai’s industrial and logistical space, showing its highest-ever demand on record.

Michael Fenton, Director of Industrial & Logistics at Savills, emphasized that Dubai and, increasingly, Abu Dhabi prove that the UAE is a dynamic economic hub in the Middle East. 

Growing demand, driven by a strong non-oil sector and various economic partnerships, underscores the need for additional supply of suitable facilities in the future.

International Competitiveness:

Savills’ report further noted that Dubai’s high ranking and Abu Dhabi’s presence in the top fifteen positions reflect the nation’s strength in this vital sector, showcasing international competitiveness and attracting businesses and investors worldwide.

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