Commit to Contribute

Commit to Contribute

Commit to Contribute

Significant increases in investment and the pioneering industrial zones initiative have led the local sector to contribute 16% of Dubai’s GDP in 2012. As the second largest contributor to the overall GDP of the UAE at 19%, industry has long been pegged as a key element in realizing the nation’s dream of being a diversified country with at least 25% of GDP derived from non-oil sources.

According to the Dubai Economic Council, the percentage of GDP sourced from the industrial sector is expected to further increase in 2013. This forecast is strengthened by a 57% increase in industrial investment from AED72.6 billion in 2007 to AED114.1 billion in 2011. Analysts agree that the industrial sector is playing a pivotal role in helping to achieve UAE’s Vision 2030.

Currently, Dubai’s industrial activity is concentrated in two main non-free zone areas, Dubai Industrial City (DI) and Dubai Investment Park (DIP). The larger of the two, DI has reported an occupancy figure of over 80% for its 7 million square feet of warehousing. According to Cluttons, 9.8 million square feet of land plots were leased in the zone in 1Q2013, with the bulk of demand driven by the automotive and agribusiness sectors.

However, the site’s 55 square kilometers of space is eager to expand and can easily accommodate new arrivals. In 2012, DI attracted 212 new companies to the zone, marking an increase of 82% in terms of the number of operators opting to use its various industrial real estate services and facilities. There are now 471 companies based in DI, with industrial investors leasing 5 million square feet of industrial land in 2012—an increase of 14% compared to 2011.

INDUSTRIAL CITY

As the second largest real estate project in the Emirate, DI is strategically located next to the new Al Maktoum International Airport and 28 kilometers away from the Jebel Ali Free Zone (Jafza). DI provides easy and convenient access to global transportation points by road, air, and sea. For this reason, it was awarded the prize for “Logistics Hub of the Year” in 2013 at the Supply Chain and Transportation Awards (SCATA). Inside the zone, activities related to logistics including industrial transportation, inventory services, warehousing, material handling, packaging, and security take place. A large number of local and regional companies have already selected DI as their preferred destination for storage and logistical facilities, such as Juma Al Majid Group, Home Centre, Al Gurg Unilever, and Al Futtaim Logistics. These businesses occupy a combined area of more than 940,000 square feet of warehouses in the city.

However, the manufacturing segment—specifically food and beverage, base metals, minerals, transport equipment, machinery, and chemicals—also plays an important role at DI. Companies working in these segments are focused on transforming raw materials sourced from the Middle East, North Africa, and the Indian Subcontinent into finished goods. Saudi Arabian businesses in particular have been drawn to DI, leasing a combined total area of more than 140,000 sqm and investing over AED500 million so far. Most of the companies from Saudi Arabia are operating in the food and beverage zone, which is considered one of the most active parts of DI.

Meanwhile, base metals producers such as Dubai Aluminium (DUBAL) have also chosen to locate their headquarters at DI due to the prime access to a large concentration of energy resources sourced from the wider region. Following suit, downstream aluminum producers have flocked to DI to work in close proximity with DUBAL, which operates one of the largest aluminum smelters in the world. The neighboring DI machinery, mechanical, and transport equipment zones comprise an important market for base metal producers. In addition, the wider GCC market imports over $8 billion worth of base metals per year, a number that is growing by an average of 20% per year.

With the Dubai Metro expansion project expected to cost $3.5 billion, a railway expansion project in Saudi Arabia of $2 billion, and a GCC regional transportation network set to cost $4 billion, the manufacturing of transportation equipment is critically important at DI. In line with this activity, opportunities exist for OEM products and after-market parts makers that make the construction of new manufacturing facilities feasible. Existing companies continue to predict long-term growth in the zone, which forms the backbone of Dubai’s industrial sector overall.

Another important part of DI’s activity is in the machinery segment, which is considered to be the largest import sector of the GCC. The value of all imported machinery reached $23 billion in 2012, and has been growing by approximately 9% each year. Dubai now has the ability to manufacture high value-added science and engineering-based products, and has been recognized for its scientific talent and world-class logistics and supply chain management capabilities in regard to machinery production. Currently, 30% of the industrial plants in the UAE produce machinery.

The region has long been famous for its access to petroleum and petrochemicals, but the UAE’s membership in the World Intellectual Property Organization (WIPO), and Dubai’s strict enforcement of intellectual property laws, make DI one of the world’s most attractive destinations for chemicals production. Among the products currently being manufactured in the zone, additives, coatings, and surfactants are the most popular.

Looking ahead, industry leaders expect Dubai to rise to the challenge of the rapidly growing regional market, with DI opening up opportunities for both local and international companies. In an interview with TBY, Abdullah Bel Houl, Managing Director of DI highlighted his expectations for “further growth of 15% from local and regional companies for industrial products and various services offered by Dubai Industrial City over the next two years, benefiting from the overall growth of the local economy.”