First phase of Dubai's Dh3.2bn CommerCity project launched

Dedicated e-commerce free zone will feature 470,000 sq ft of a total 2.1m sq ft planned for the project in Umm Ramool

A computer-generated image of office units at Dubai CommerCity, the Dh3.2bn e-commerce free zone being built in Umm Ramool near Dubai International Airport. Image courtesy of Dubai Airport Freezone AuShow more

The first phase of Dubai CommerCity, a Dh3.2 billion e-commerce free zone, is being launched by Dubai Airport Freezone Authority (Dafza).

Phase one will contain 470,000 square feet of a total of 2.1 million sq ft being built at the project in the Umm Ramool area of the city, close to Dubai International Airport.

“The launch of Dubai CommerCity aims to lead the future of e-commerce business in the region. The project has been thoroughly studied not only to provide foundational solutions, but also to stimulate and support business and prosperity at a time when the sector is going through peak growth,"  Sheikh Ahmed bin Saeed Al Maktoum, chairman of the Dubai Airport Freezone Authority (Dafza) said in a statement on Sunday. "The e-commerce sector is key as its value is expected to reach $148.5 billion by 2022 in the Middle East, Africa and South Asia regions.”

Dubai first announced plans for CommerCity to be the first dedicated e-commerce free zone in the wider Middle East, North Africa and South Asia region in 2017. The first phase will contain a 'business cluster' with more than 320,000 sq ft of offices and 145,000 sq ft of logistics units and "multi-client warehouses". These will be housed in a logistics cluster managed by Hellmann Worldwide Logistics and DHL.

More than 51 per cent of the warehouse space has already been leased.

The GCC is the fastest-growing region for e-commerce and the UAE is the second-fastest market within it, with an expected compound annual growth rate of 38.3 per cent, Sheikh Ahmed said, without giving a time period.

“The launch of the new Dubai CommerCity facilities comes in line within the planned schedule," said Mohammed Al Zarooni, director general of DAFZA.

"Despite the global circumstances and the challenges posed by the Covid-19 pandemic, we have witnessed an urgent need to build a world-class e-commerce platform. It is set to attract specialised companies aiming to establish their regional headquarters in the emirate of Dubai, which helps them expand and develop their regional operations to be able to keep pace with the significant growth in e-commerce,” he added.

As well as the contracts signed with Hellman and DHL to manage the logistics cluster, Dubai CommerCity has signed partnerships with e-commerce software provider Magento Commerce and consultancy Redbox Digital to offer an 'e-commerce as a service' package to online retailers, it said. Storage built at the site will be offered under a 'pay as you go' model to allow companies to scale their operations in line with demand, Dafza said.

The value of the e-commerce sector in the Middle East and North Africa region grew to $22bn last year, up from $4.2bn in 2015, a white paper published last week by Dubai-based venture capital company Wamda and the Massachussetts Institute of Technology's Legatum Centre for Development and Entrepreneurship said.

"The bulk of growth in the sector was driven by the UAE, Saudi Arabia, and Egypt, which together account for 80 per cent of the region’s overall e-commerce market," it added.