Dubai’s ever-rising skyline could soon extend to its industrial heartland as Jebel Ali Free Zone runs out of space.
About 80 per cent of the land in the region’s biggest free zone is already packed with warehouses. Soon the only way to build may be up.
“We are running out of land,” said Ibrahim Al Janahi, deputy chief executive of Jebel Ali Free Zone Authority (Jafza). “We only have 20 per cent of the land left in the total area of Jebel Ali.”
Soaring demand for industrial and logistics space pushed Jebel Ali warehouse rents up by as much as 30 per cent last year, beating residential and retail property asset classes.
The free zone drew 650 new customers last year, helping profits surge by more than 50 per cent to top Dh1 billion.
Although Dubai has gained a global profile defined by lavish real estate projects, luxury hotels and giant malls, the Jebel Ali Free Zone has been a major part of the emirate’s economic recovery since the global financial crisis ended in 2009.
Dubai’s non-oil trade reached Dh1.33 trillion last year – up from Dh1.32 trillion in 2013 – with free zones accounting for Dh488.7 billion of that.
Jebel Ali has a workforce of about 170,000 people, accounting for 7 per cent of total employment in Dubai, according to a report produced by the free zone last year.
But as more companies set up shop in the sprawling industrial estate on the outskirts of the city, there is limited space for it to grow.
Bounded by the port on one side and the Dubai World Central development, including Al Maktoum airport, on the other, the free zone is seeking new ways to maximise its footprint.
If building outwards is not an option, then building up may be what is required.
“We are in talks with the higher authorities to acquire additional land, but whatever we have currently we are trying to utilise in the best way,” said Mr Al Janahi.
“One of the things we are thinking about is multiple stacking. So instead of building horizontally, we would build vertically.”
Jafza’s rapid growth has been spurred by its location between the Middle East’s biggest port and what could one day be the world’s biggest airport.
The bonded transport corridor between the free zone and Dubai World Central has been key to its popularity among occupiers who benefit from its land, sea and air linkages.
The number of companies operating there has doubled in a decade.
To maintain that momentum, Jafza planners will need to make its land bank work harder, especially as more industrial locations attract tenants – from the neighbouring Dubai Investments Park to the emerging Khalifa Industrial Zone Abu Dhabi (Kizad) located about 50 kilometres away.
Although major logistics companies tend to favour vast low-rise warehouses that can extend across hundreds of thousands of square feet, other industrial occupiers can be accommodated in taller buildings.
“Today you have a lot of industries that don’t require a large amount of land like light workshops, staff accommodation and showrooms,” said Mr Al Janahi.
But building higher will not suit all occupiers, according to Arun George, a senior surveyor at Knight Frank, an international property consultancy.
He said occupiers with large space requirements of 300,000 sq ft and above might look to Dubai World Central (DWC).
“You could see some companies incubate at Jebel Ali, and when they get to a certain size, move to DWC,” he said.
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