The UAE continues to strengthen its position as a global logistics hub helped by its geographical positioning and world-class transport infrastructure according to latest Knight Frank's report on the UAE industrial and logistics sector.

The report which provides an overview of the key observations and important insights to the market performance said Dubai's economy continues to be driven by trade tourism and transport while Abu Dhabi's industrial sector remains heavily centred towards oil and gas.

"Over four billion people live within an eight hours flight from Dubai covering major markets in Africa and Asia. Dubai's geographical location supply chain ports and airports legislation and infrastructure make it an ideal supply and re-distribution gateway" William Neill partner at Knight Frank UAE.

Neill also noted that despite the fall in oil prices rents in Abu Dhabi have remained stable across the emirate. The lack of quality accommodation being in short supply across the industrial market is one of the key reasons for rentals rates holding Q4 2014 levels he said.

The number of enquiries has declined slightly but has not affected the rentals as there is limited quality industrial accommodation and no additional supply is expected in the near term. The maximum enquiries received in Abu Dhabi over the third quarter were from the construction sector (50 per cent) while the average size of requirements for this sector was 1500sqm.

The industrial rental rates in Abu Dhabi have been flat with only Kizad & Al Markaz registering a seven per cent increase year-on-year. Kizad and Al Markaz phase 1 have been leased out and the increase in rentals is a function of a few units that were leased at a premium. Oil and gas companies however continue to make up 20 per cent of total enquiries with occupiers seeking more economical facilities.

In Dubai there has been approximately four per cent growth in rentals on average over the last six months across the industrial districts being tracked in Dubai. Jafza class one rents witnessed an increase of two per cent over the last six months and continued to be the favoured location for global occupiers; and capital values have remained flat to approximately Dh250-300 per square foot.

According to the report more than 50 per cent of the enquiries were for free zone facilities in Jafza. Dubai Investment Park (DIP) which registered the largest H1 growth (five per cent) in rentals and Dubai Industrial City (DIC) are witnessing substantial interests from occupiers with the ability to secure larger and better quality facilities. Demand for warehousing from food and beverage companies and food retailers continues to increase. There was significant interest from occupiers wishing to setup central kitchens. Enquires from fashion and home improvement retailers have also seen an increase. Most of these requests were for short-term requirements. Occupiers in this sector typically have numerous facilities spread over multiple districts and consolidation into larger units is eminent. Demand from third party logistics operators has also seen a steady increase with maximum enquiries from global and regional third party logistics providers both in Jafza and DIP.

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