projects of scale, to rent and convert land. Te government is establishing them to boost investment.” Tis investment underpins Abu Dhabi’s industrial ambitions. Without quality facilities that match the stock on offer in established markets, the city will struggle to attract the multinationals key to driving growth. “It’s essential to have the quality to attract these large, anchor tenants.
Tey are crucial because they attract the other companies,” said Said, who counts Etihad Airways, the UAE Army and oil services giant Petrofac among his clients. “[Grade A facilities] are one of the deciding factors for a company, alongside utilities and infrastructure.” It also translates into better returns for landlords. In neighbouring Dubai,
where Jebel Ali free zone contributes some 25 percent to the emirate’s GDP, high quality, pre-let warehousing can command rents of up to AED35 per sq ft. Average industrial rents are closer to AED18-20 per sq ft, said property consultancy Cluttons in a January report. From an investment perspective, industrial real estate has seen little
of the market woes suffered by Abu Dhabi’s residential and commercial sectors. Te market emerged comparatively unscathed from the UAE’s property crash, thanks to a lack of speculative building and close ties to the Gulf state’s core area of business, trade. “Every [real estate] market has gone down, but the industrial sector didn’t have the speculation to drive oversupply levels, as we saw in the residential and office markets,” said Matthew Green, head of UAE research and consultancy at real estate broker CBRE. “Industrial market is owner-
occupier led - typically you are leasing rather than buying. Investors buy land and then lease it on. “Te fundamentals are also solid; the UAE is a strong import/export
market, the ports and airports here do well and so the industrial market does well from that as well. All these components have held steady over the past few years, despite a small blip in the downturn.” Combined, these factors have made industrial real estate an increasingly
attractive asset class for investors searching for long-term, stable returns, said ADBH’s Said. “Tat’s why we’re in the market. Te risk is lower and the returns are
longer, by which I mean rents are often lower than in other sectors but leases can run for 20 to 30 years.” Tat’s not to say that industrial projects in the UAE capital haven’t
scaled back their plans in line with new economic realities. Te Al Markaz development, owned by Waha Capital’s real estate arm, has stripped out a planned low-income housing element in favour of building only warehouses and storage solutions. Te residential element was “not profitable” use of the six sq km plot, Waha Capital CEO Salem Rashid al-Noaimi told Reuters in February. ADBH, meanwhile, now exclusively custom-builds industrial space for
tenants, rather than speculatively building and then trying to source a client to lease the property. “We changed course slightly in the downturn,” said CEO Said. “Now, we build to suit and in exchange we benefit from the tenant taking a long lease” l
APRIL 2012 I CITYSCAPE I 35
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