x Abu Dhabi, UAETuesday 16 January 2018

Industrial rents in Abu Dhabi rebound from financial crisis

After falling by as much as a third during the financial crisis, rents for factories and warehouses in the main industrial areas of Abu Dhabi have increased as much as 10 per cent compared with a year ago.

Rents for factories and warehouses in Abu Dhabi’s main industrial areas have risen by up to 10 per cent from a year ago.

That marks a rebound from the financial crisis during which industrial rents, viewed as an indicator of a city’s economic health, plunged by as much as a third in some areas.

With the uptick in the emirate’s non-oil related economy, annual rents in the Industrial City of Abu Dhabi 1 (Icad 1) and in the Almarkaz area (south of Abu Dhabi) rose 10 per cent year on year respectively to Dh550 per square metre and Dh400 per square foot, a report by the property broker Knight Frank shows.

Rents in the older Mussafah area also increased about 5 per cent to between Dh350 per square metre and Dh500 per square metre, depending on the building’s age and quality.

However, rents have not increased in Khalifa Industrial Zone Abu Dhabi (Kizad), which opened in September last year. The developer Abu Dhabi Ports Company froze annual rents at about Dh380 per square metre to attract more tenants. Presently, there are 44 firms located in Kizad.

In the Abu Dhabi Airports Company (Adac) Free Zone, annual rents for warehouses stayed the most costly in the capital with a slight increase to Dh750 per square metre.

Industrial rents in Almarkaz are 40 per cent higher than they were at the bottom of the market, while those in Icad 1 are 22 per cent higher.

However, average industrial rents in the Adac Free Zone, Icad 1 and Mussafah remain 15 to 20 per cent below their peaks, according to Knight Frank.

The broker forecasts a further 10 per cent rise in industrial rents in Abu Dhabi over the coming year before taking into account the price increases likely to arise should Dubai win the bid to host Expo 2020.

Edward Batten, Knight Frank’s commercial leasing manager at its Dubai office, said the capital appeared to be following Dubai’s lead.

“We are seeing an increase in demand for industrial space really coming through now,” Mr Batten said. “Especially from companies which use a lot of power, such as food and beverage or pharmaceuticals manufacturers because the price of electricity is lower in Abu Dhabi than in Dubai.”

In the first nine months of the year, food-and-beverage as well as engineering-and-construction firms accounted for the highest number of new inquiries for logistics space in the capital, Knight Frank said.