It is a hands down fact that Dubai enjoys a geographical advantage on the globe. It is well situated between the heavily manufacturing Asian countries and the large European consumers. Due to its favorable location, Dubai today plays a significant role in international trading and transport logistics.
Dubai is currently undergoing massive expansions across land, sea and air routes. UAE’s much of the economic and international successes are largely contributed by Dubai’s ever-expanding transport sector. The government, from its side, is doing everything possible to improve the infrastructure by implementing public-private partnerships. The current slowdown in global growth due to falling oil and gas prices, regional uncertainties and a strengthening dollar have posed unique challenges to the environment of Dubai.
Looking at the current prospects of Dubai, many companies have laid their confidence in the Logistics sector of Dubai. Arcapita, the global investment firm, has acquired a portfolio of around US $150 million. They are planning to establish up to 10 warehousing facilities, occupying a total area in excess of 1.2 million sq. ft. These facilities are mostly coming up in Dubai Investments Park. Arcapita is planning to acquire most of these assets near Al Maktoum International Airport where Dubai Expo 2020 site is coming up. These new investments in Dubai’s warehousing facilities are followed by a similar investment of $250 million last year in the Al Quoz area of Dubai.
Another Project forwarding provider, Panalpina, has incorporated a 40,000 sq. meter logistics and manufacturing facility in Dubai South. This proposed facility is touted to be the largest logistics and manufacturing facility globally for Panalpina. This proposed facility will feature two units of 10,200 square meters, which will be dedicated to out-of-gauge and bulk oil and gas equipment. They plan to use majority of the operational space for inbound to manufacturing and vendor managed inventory services in support of logistics manufacturing services and outbound distribution services. This proposal came in the backdrop of a report that stated that global airfreight market has grown by 1 percent and 2 percent in the recent years. Panalpina has also announced its acquisition of Airflo, a company that specializes in perishable shipments. Panalpina has grown its airfreight volumes mainly due to growth in perishable business.
The logistics sector of Dubai is largely being driven by the growth of e-commerce and the increase in regional trade to create a diversified logistics platform. Many investors are currently showing interest in the logistics platform as it delivers a balanced yield and huge returns.