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June 6, 2015
United Arab Emirates, Dubai, June 3rd , 2015 - Dubai’s everrising skyline could soon extend to its industrial heartland as Jebel Ali Free Zone runs out of space. Approximately 80% of the land in the region’s largest free zone is already packed with warehouses and 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% of the land left in the total area of Jebel Ali.” Soaring demand for industrial and logistics space has pushed Jebel Ali warehouse rents up by as much as 30% in the last year.
The free zone also drew 650 new customers last year, helping profits surge by more than 50% to top Dh 1 billion.
Although Dubai has gained a global profile defined by luxury real estate projects, high end hotels and gargantuan 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 Dh 1.33 trillion last year - up from Dh 1.32 trillion in 2013 – with free zones accounting for Dh 488.7 billion of that. Jebel Ali has a workforce of about 170,000 people, accounting for 7% of the total employment in Dubai.
However, 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. The area is bounded by the port on one side and the Dubai World Central development, including Al Maktoum airport on the other. The free zone is now seeking new ways to maximise its footprint. If expanding laterally 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 currently have we are trying to utilise in the best way,” said Mr Al Janahi. “One of the things we are thinking about it multiple stacking. So instead of building horizontally, we would build vertically.”
The bonded transport corridor between the free zone and Dubai World Central (DWC) has been key to its popularity among occupiers who benefit from its land, sea and air linkages. The number of companies operating in the area has doubled in a decade.
In order to maintain that momentum, JAFZA planners will need to make its land bank word 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 50km away.
Although logistics companies prefer vast low-rise warehouses than 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 such as light workshops, staff accommodation and showrooms,” said Mr Al Janahi.
However, 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 may look to DWC. “You could see some companies incubate at Jebel Ali, when then they get to a certain size, move to DWC,” he said.
Interviews available upon request.
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