Dubai is witnessing completion and occupation of a number of “super sheds” which are appealing to institutional investors, Cluttons said on Tuesday.
“After years of speculative development that forced international logistics companies to lease inferior quality and light industrial buildings, the first quarter 2011 has been marked by the completion and occupation of a number of ‘super sheds‘ that would appeal to many institutional investors,” the global consultancy said in a report.
The recent completion of the 650,000 square foot shed for Ceva Logistics in Jafza’s south zone is given as one example of the improvement in building quality. The building was constructed by Gazeley, a global provider of logistics space, according to Ceva’s exact specifications. Prior to its completion, the building was sold to a third partly investment fund with Ceva Logistics signed up to a 20-year lease.
“With the increased level of quality premises recently coming online in Dubai World Central and Jebel Ali Free Zone, it is hoped that the design and building of new logistics facilities will continue to be shown consideration which should help the market become more appealing to both large international occupiers and investors alike,” the report said.
Earlier this year, Jones Lang LaSalle said the light industrial and logistics segment will be the best performing sector in the UAE real estate market in 2011.
“Occupier demand will cluster around locations with strong infrastructure and transportation connectivity. Investor interest remains focused on institutional grade properties with long term leases and strong tenant covenants because of the stable yields and lower risk,” it said.
According to Cluttons, high quality logistics and distribution facilities with institutionally recognised lease terms in place are achieving upwards of Dh30 per square foot. In contrast, low quality warehousing rents are around Dh21 per square foot.