Logistics companies in the UAE have signed up to lease a glut of warehousing space around Dubai World Central in Jebel Ali as the new airport increases operations.
According to property agents, up to a million square feet of warehousing space has been leased during the first six months of this year in the adjacent 140 square kilometre DWC and 56 sq km Jafza free zones as the new airport begins to increase its functions.
Firms taking space at the new facilities during the period include the freight company UPS, which expanded its operations by 160,000 square feet in Jafza; the German-based logistics firm Hellmann that signed for an additional 130,000 sq feet; and logistics giant DHL which is understood to have signed for another 500,000 sq feet at DWC.
According to a report by Knight Frank, the average annual rent for prime logistics facilities in Jafza increased to Dh33 per sq foot in June, a slight increase on the previous quarter and a 10 per cent increase on the same period the previous year when it stood at Dh30 per sq ft.The airport, which is expected to become the world's largest when fully operational, opened a cargo centre in 2010 and on October 27 will open its doors to its first passengers as it becomes a hub for the budget airlines carrier Wizz Air of Hungary and Saudi Arabia's nasair.
When finished, DWC will have five runways and a capacity of 160 million passengers and 12 million tonnes of cargo a year. The passenger terminal, completed last year, will initially be able to handle 7 million passengers a year. It is expected to ultimately take over operations from the city's main Dubai International Airport.
DWC is also gearing up for a raft of additional flights taking place over 80 days from next May when some scheduled passenger flights and all freighter, charter and general aviation flights are diverted from Dubai International to DWC so that the older airport can carry out essential engineering work on its runways.
During the first six months of the year, air movements at DWC rose 37 per cent to 10,237, up from 7,474 movements in the first half of 2012. For the second quarter of this year air movements rose 35.4 per cent to 6,133, up from 3,961 in the three months to June 2012, Dubai Airports said this week.
"The jump in air movements was driven by a surge in general aviation and training flights since the start of the year. Recent fluctuations in charter traffic have seen freight volumes at Dubai World Central-Al Maktoum International dip in the first six months of 2013," it said in a statement.
Freight volumes fell 3.2 per cent to 102,929 tonnes in the first six months of the year, down from 106,333 tonnes in the same period in 2012.
For the second quarter volumes fell 13 per cent to 48,955, down from 56,271 in the second quarter of 2012. The fall comes as freight volumes stabilise after the rapid growth in the first few years of cargo operations at the airport.
According to Knight Frank, rents for logistics facilities in Dubai were highest in Al Quoz where they stood at Dh34 per sq ft. At Dubai Investments Park rents stayed put at Dh24 per sq ft.
"We are seeing a big increase in demand from logistics firms for the whole area around Jafza and DWC since the start of the year," said Edward Batten, the commercial leasing manager at Knight Frank.
"Knight Frank alone has leased nearly 300,000 sq ft of warehousing space since the start of the year in these areas and we expect demand to increase even more in the second half of the year."
