Savills eyes Dubai’s Silk Road strategy for industrial demand boost

Real estate advisor says demand for industrial space was subdued in H1'19, but Dubai Silk Road may improve H2 prospects

The Dubai Silk Road strategy is expected to buoy industrial demand.
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The Dubai Silk Road strategy is expected to buoy industrial demand.

Real estate advisor Savills said Dubai’s industrial property sector faced challenges due to a mismatch between supply and demand in H1 2019, with Grade A and B rents respectively declining by 4-6% and 8-10% during the period, but the Dubai Silk Road strategy – approved by HH Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, Crown Prince of Dubai and Chairman of Dubai Executive Council in March 2019 – is expected to encourage e-commerce and third-party logistics (3PL) companies in the city in H2 2019. 

Dubai Silk Road strategy focuses on trade enhancement between free zones, the UAE's emirates, and logistics service hubs – such as DP World's global locations – to drive demand in Dubai's industrial and warehousing sectors in the city, particularly among Chinese investors.

Commenting on the findings of Savills’ Dubai Industrial Market report for H1 2019, the company’s head of industrial and logistics, James Lynch, said: “The transactions we have seen [in H1 2019] are towards spaces that have been built-to-suit and have a ‘flight to quality’ as organisations seek operational efficiencies through improved facilities.

"Landlords are increasingly flexible, so there are good opportunities available for those pursuing space upgrades.”

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