Demand for Dubai's Industrial & Logistics Space Spikes in the First Half of 2023

Dubai's logistics and industrial space was in high demand during the first half of 2023, according to the Dubai Industrial Market in Minutes report from Savills Research.
Various factors are responsible for this increase in demand.

A large number of companies are shifting their base from other emirates to Dubai.
Many companies are adopting nearshoring.

Companies in the manufacturing, e-commerce, oil and gas, and third-party logistics segments emerged as key drivers of demand during the period. 

There was a surge in local manufacturing, including textile and building material suppliers, in the first half of 2023. This growth is primarily due to the UAE government's driving initiatives to boost its industrial sector, like the 'Operation 300 bn' industrial strategy.

The country has also benefited from the China Plus One strategy. The scheme includes Chinese manufacturing companies leasing space to produce goods within the UAE and export to other GCC and African countries.

As for the e-commerce segment, many are adopting hub-and-spoke delivery channels. The approach includes setting up central "mother" warehouses close to critical infrastructure such as ports. The rising need for quick delivery platforms and the increasing population of Dubai are also driving the establishment of compact "last-mile" storage facilities closer to the cities.

The UAE government plans to invest nearly $150 billion by 2027 to strengthen its oil production, raising the need for leased space in the oil and gas sector. The government aspires to position the UAE as an international hub for exports and re-exports and create more job opportunities. 

Dubai's real estate market is also seeing an upward trend in occupancy for different types of warehousing facilities. Key logistics zones such as Jafza, DIP, NIP, and Dubai South are making a million square feet of new warehousing area available to meet the growing demand.

Quoting Swapnil Pillai, Associate Director of Middle East Research at Savills, "Leasing activity was concentrated across prominent non-bonded warehousing hubs such as Al Quoz, DIP, and NIP. Vertical farm operators, companies from the retail and leisure sectors, as well as e-commerce and FMCG players, were the notable occupiers of space."

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