Aldar Properties, Abu Dhabi’s biggest listed developer, is investing Dh1 billion ($272 million) to expand its logistics business in the UAE as demand for warehouses continues to rise in the Emirates amid the diversification of its economy.
As part of the investment, Aldar has bought seven central logistics hubs and an adjacent land plot in Dubai Investments Park marking its first such acquisition in the emirate, the company said in a statement on Tuesday to the Abu Dhabi Securities Exchange, where its shares are traded.
Aldar bought the property from Seven Seas Steel Industries.
The company will also build 233,000 square metres of new Grade A logistics units across the UAE, including 200,000 square metres of gross leasable area (GLA) of single tenant units and logistics parks in Dubai. It will also complete a 33,000-square-metre expansion of its current logistics asset, ADBH in Abu Dhabi, fully leased to Etihad, Mubadala and Twofour54.
The expansion will take Aldar’s total logistics GLA in the UAE to more than 400,000 square metres.
“We are experiencing particularly strong demand for high-grade facilities in the UAE, driven by robust intraregional trade, high-quality infrastructure and an expanding digital economy,” Talal Al Dhiyebi, group chief executive of Aldar Properties, said.
“Aldar is well positioned to capitalise on this growth.”
The demand for warehouses in Dubai and Abu Dhabi continues to rise as the UAE focuses on diversifying its economy away from oil amid new trade agreements around the world.
Dubai recorded 9.9 million square feet of new warehouse requirements in the first nine months of last year amid an influx of new investments, a report from Knight Frank found.
The logistics sector dominated demand, accounting for 44 per cent of new requirements, followed by manufacturing and industry, and the technology sectors.
“Demand is outstripping supply and occupiers are faced with the prospect of leasing more secondary stock [in Dubai], while others are gravitating towards locations in Abu Dhabi, which is benefiting from spillover demand,” the report said.
The shortage of warehouses, combined with Dubai's D33 agenda, which aims to position it among the world's top cities by economic strength by 2033, is expected to push rents higher, according to the report.
“The growth of the UAE’s logistics sector is supported by substantial investment into transportation and infrastructure, to support diversification of the economy,” Aldar said.
“Tenants are in a wide range of sectors, primarily focusing on third-party logistics, e-commerce and retail.”
Aldar, which reported a 43 per cent annual increase in third-quarter profit on higher revenue, is buying new property to expand its portfolio.
Last month, the company bought UK developer London Square for Dh1.07 billion, marking its first acquisition outside the Mena region as the developer expands its global footprint.
In September, Aldar Estates, a unit of the company, also acquired FAB Properties, which provides property management services across the UAE.
Under the deal, Aldar Estates will integrate a property management portfolio of 22,000 residential units across 600 properties into its platform in the UAE.
Aldar is also teaming up with Dubai Holding as it seeks to develop new real estate projects across prime locations in Dubai.
