After big towers come big sheds as warehouse boom hits Dubai

The proposed takeover of P&O by DP World has cemented Dubai”s position as a global logistics hub. Angela Giuffrida reports on the new wave of big shed construction sweeping the emirates as demand for industrial and distribution space gains momentum.

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By  Angela Giuffrida Published  February 25, 2006

The UAE has long been a target for logistics companies around the world seeking to develop and strengthen trade links with Asia, Africa and Europe. Now the emirates are gearing up for a new phase of industrial warehouse construction, driven by the booming logistics sector. The pre-eminent position of Dubai within the regional logistics industry is likely to be further cemented with DP World”s proposed takeover of P&O — unanimously supported by shareholders last week. But beyond this deal, a raft of industrial construction projects are underway that will add millions of square metres of industrial and distribution space. Helping to facilitate the emirate”s emergence as a global hub is Dubai Logistics City. Spread over 25 km2, Dubai Logistics City, which is the first phase of the massive mixed-use Jebel Ali Airport City, is a key component of the world”s first multi-modal transport platform under a single customs-bonded and free zone area. Due to be operational by the end of 2007, it will eventually combine all required transport modes with a logistics zone, with ample space for warehousing and other logistics services, such as order fulfilment, merge-in-transit, postponement-in-assembly, kitting and packing. The development has triggered construction on a massive scale. Grading work for its first 4.5 km runway, which will be wide enough to accommodate the new Airbus A380 superjumbo, involved the movement of some 20 million m3 of earth. Two 1.8 km-long tunnels, which will run under three of the project”s six runways, as well as form an access link from the passenger concourse to the cargo terminal, will also be built. Other construction works include the development”s common facilities and infrastructure, including shared forwarder warehouses, air cargo terminals, roads and utilities. With grading works completed earlier this month, the 50 logistics companies which have opted to build their own facilities will have access to their sites during the second quarter of this year. “Covering more than 2 million m2 of Dubai Logistics City land, these companies have started to design and plan their facilities, perfectly reflecting the diversity of the logistics business,” said HH Sheikh Ahmed bin Saeed Al Maktoum, president of the Department of Civil Aviation and chairman of the Emirates Group. Among the companies keen to take control of the construction of its own facilities is Swiss logistics operator, Kuehne + Nagel. The company”s distribution centre, which is currently in the planning phase, will be progressively expanded to cover more than 50,000 m2 and will complement its existing facilities in Jebel Ali Free Zone and the Dubai Air Cargo Village. Kuehne + Nagel plans to use Dubai Logistics City as a base for further expansion in the Middle East and India. “We are focusing on sectors that occupy an important position for us, such as hi-tech, pharmaceutical, retail and consumer goods, automotive and aviation, industrial and chemicals, said Dirk Reich, a member of the board of management of Kuehne + Nagel International. He added that the trend to outsource logistics will continue. “We expect that customers who already receive comprehensive logistics support from us in other regions of the world will want to expand their business in partnership with us.” Other components of Dubai Logistics City include residential and commercial development. The entire project will house 750,000 people when completed. “This immense population presents an opportunity for real estate developers and investors to create residential and commercial projects within the designated areas in the City, with prospects for freehold and long- term leasing contracts,” said Michael Proffitt, CEO of Dubai Logistics City. Dubai Investments Park Development Company and Saudi Arabia-based Al Hanoo are also promoting major industrial developments in Dubai and Sharjah, respectively. Work is underway on Emirates Industrial City, the largest industrial development project in the emirate of Sharjah, which is being developed by Al Hanoo. The 7.7 million m2 industrial park will comprise eight sectors, accommodating 3,000 medium and light industrial operations, as well as commercial enterprises and residential areas. Sharjah is already home to around 45% of all the industrial facilities in the UAE, according to the developer. While Al Hanoo is racing ahead with its new development in Sharjah, Dubai Investments Park Development Company has announced a comprehensive development plan for phase five of the Dubai Investments Park project. The fifth phase will be divided into five sub areas covering a total area of 3.7 million m2, and will accommodate light and hi-tech industries and employee accommodation. Dubai Investments Park has so far invested over US $32.6 million on this phase. The latest phase is set to be completed by the end of this month.

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