Warehousing in the Middle East

Underpinned by modern infrastructure and its strategic position in close proximity to Europe, Africa and other nearby land-locked countries, the Middle East’s industrial, manufacturing and logistics exports have soared in recent years.

The Middle East economy heavily relies on targeted processing, production and logistics facilities. Additionally, with a booming demand for consumer goods and tax incentives, the local market is rapidly becoming a magnet for overseas industrial and manufacturing operations.

Healthy industrial, manufacturing and logistics sectors are vital for the future of the regional economy as it continues its transition away from reliance on oil and gas exports towards a more diversified economy.

Recent development of numerous free zones and industrial clusters serve as evidence that the region has embarked on a trajectory of developing into a leading industrial economy and is optimising the utilisation of its contemporary infrastructure and distribution channels, which includes three of the world’s most far-reaching airlines – Emirates, Etihad and Qatar.

Qatar

Qatar is aiming to become a global trading hub by attracting foreign direct investment to take its logistical capabilities to the next level. However, the ongoing embargo (which commenced in 2017 when KSA, UAE and various other nations imposed sanctions on Qatar) has led to higher import costs for plant and materials, which explains in part why Doha ranks in the top ten in our global index for warehouse construction costs.

In spite of this, Qatar’s recently-established free zones, located close to Hamad International Airport and Hamad Port, are designed to attract companies seeking infrastructure that serves trading routes between Asia and Europe.

The recent relocation of DHL Express to the airport free zone at Ras Bufontas will bring bulk logistics processing capabilities to Qatar.

UAE

Demand for Grade A industrial and warehousing space witnessed a particularly strong increase in Dubai in the first half of 2020, where eCommerce continued to fuel growth, making this a warm market.

According to the Department of Economic Development (DED), 102 new trade licenses for online shopping and 3PL companies were issued in April 2020 alone.

In July 2020, Union Coop, the largest Consumer Cooperative in the UAE opened ‘Coop Factory’ in the Al Tayy suburb of Dubai. The 425,000 sq. ft. facility is one of the largest food and non-food commodity warehouses in the Middle East and could spur further mega-sized developments.

Healthcare has also been one of the key drivers of demand during H1 2020, with accelerated activity levels sparked by COVID-19. Companies from the health and life science sectors have been taking up warehousing space for build-to-suit projects, especially within the Dubai Science Park.

There’s also been notable growth in vertical farming capabilities within warehouses, which is being heavily supported by the leadership in both Dubai and Abu Dhabi.

Kingdom of Saudi Arabia

Saudi Arabia has seen its non-oil industrial output rise dramatically in recent years across key sectors such as petrochemicals, plastics, metal, construction materials and electrical appliance manufacturing.

The Kingdom is investing heavily in logistics as part of Vision 2030, with the sector forecast to represent 33 percent of the Kingdom’s economy by the end of the decade.

The largest of the six new economic cities currently being built is the $27bn logistics-focused King Abdullah Economic City in Rabigh, which is home to the fastest-growing container port in the world and has high-speed rail links to nearby Jeddah, Medina and Mecca. The industrial zone is estimated to cover 4,400 hectares and can host 2,700 industrial tenants (IndustryME).

For further information contact:

David Hancox
Director
e: [email protected]
t: +971 2 441 0955

Go to the main warehouse cost index 2020 page