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Dubai veg market to double despite warehouse shortage

Dubai's ambitions to become a centre for food trade come at a time when warehouses in the emirate are in high demand Unsplash+/Getty
Dubai's ambitions to become a centre for food trade come at a time when warehouses in the emirate are in high demand
  • Dubai Municipality and DP World deal
  • ‘Opportunities’ for development
  • Warehouse space at a premium

Dubai plans a massive expansion of its fruit and vegetable market to make it the world’s largest, despite the fact warehouse rents in the emirate keep increasing amid a lack of quality supply.

On Wednesday Sheikh Mohammed bin Rashid Al Maktoum oversaw the signing of a deal between Dubai Municipality and ports operator DP World for “the doubling of the current market area” devoted to the trading of “foodstuffs, fruits and vegetables”.

“Dubai aims to be a leading destination for markets, export and re-export operations across various sectors, maximising economic opportunities for investors in this field,” Sheikh Mohammed said upon unveiling the project.

Sultan Ahmed bin Sulayem, group chairman and chief executive of DP World, said both local trading and exports of fruits and vegetables are on the rise, pointing to “immense opportunities” for more development.

No further details were released about the project, but it has been announced against a backdrop of tight warehouse availability across Dubai, and moves by developers to increase high-quality industrial and logistics space.

In the first quarter of 2024, the Jebel Ali Free Zone recorded a 26 percent annual increase in warehouse rents amid an influx of Indian businesses after the signing in 2022 of a new India-UAE free trade deal, according to an analysis by real estate services company JLL.

A new 100,000 sq m warehouse is now being developed in the Jebel Ali Free Zone for the purpose of promoting Indian exports, JLL noted. The Bharat Mart is slated to open in 2026. 

Earlier this year, Dubai South and Aldar separately clinched an agreement to develop a logistics district across 24,000 sq m of Grade A build-to-lease logistics space. Completion is expected by the end of this year. 

Meanwhile, Dubai Industrial City also witnessed strong industrial and logistics rent growth, according to JLL, reaching AED350 per sq m per year in the first quarter, up from AED300 in the previous quarter.

More traditional industrial areas such as Umm Ramool, Ras al Khor and Al Qusais recorded slower warehouse rent jumps, in the range of 5 to 7 percent, due to the “the scarcity of available land”, and little new supply of investment-grade properties there, the consultancy found.

The trend is long-running. Rents in several industrial areas across Dubai, including Al Quoz, Dubai Industrial City, National Industries Park and Jebel Ali Industrial Area, exceeded pre-pandemic levels in 2023, Knight Frank found in a review of data published in the third quarter of last year.

“This growing pool of demand has prompted both local and international developers to explore opportunities to enter the market with Grade A logistics build-to-rent products,” Maxim Talmatchi, Knight Frank co-head of industrial and logistics in the UAE, said in a statement at the time. 

“We expect approximately 9-10 million square feet of Grade A logistics warehousing to be delivered in the next 10 years.”

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