MARKETVIEW

Signs of market fragmentation amidst weakening economy

UAE, Industrial & Logistics, H1 2016

OVERVIEW

H1 2016 CBRE Research © 2016 CBRE Middle East | 1

Figure 1: Average Brent Crude Oil Prices (2009 – H1 2016)

Source: Energy Information Administration (www.eia.gov)

Stable y-o-y Stable y-o-y

At the end of June 2016 the Emirates NBD UAE PMI Index closed at 53.2 down from 54.0 in May. The report also highlighted weak overall employment conditions, with only marginal growth recorded during the month and during the second quarter as a whole. However, the report also highlighted the relative strength of the non-oil sector, which is forecasted for solid growth during the year, underlining the importance of the country’s diversification efforts in recent times.

Despite the challenges brought about by the global economic slowdown, the UAE continues to position itself as one of the most competitive countries in the Arab region. According to the Global Competitiveness Report 2015– 2016 released by the World Economic Forum, the UAE is ranked 12th on its competitiveness index, maintaining its position from the previous year. In terms of Infrastructure, the UAE is ranked 3rd globally and first among the GCC countries.

Prime industrial rentals have remained steady in Dubai, underlining the demand for good quality warehousing spaces. However, conditions in secondary markets are weakening.

-30%

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

0

20

40

60

80

100

120

140

Mon

thly

Chan

ge (%

)

Euro

pe B

rent

Spo

t Pric

e FO

B (U

S do

llar/b

arre

l)

MARKETVIEW

© 2016 CBRE Middle East | 2

UAE INDUSTRIAL & LOGISTICS MARKET

Figure 2: UAE Inflation and Growth: 2013 - 2016

Figure 3: UAE GDP by Sector (2015)

Figure 4: Oil vs. Non-oil GDP (2015)

H1 2016 CBRE Research

Agriculture and fishing

1%

Manufacturing 9%

Services 51%

Mining and Quarrying

30%

Other Sectors 9%

UAE MACRO INDICATORS

2013 2014 2015 2016

Inflation 1.1 2.3 3.8 2.0

Real GDP Growth 4.3 4.6 2.7 2.9

- Hydrocarbon sector 2.9 4.0 1.0 1.0

- Non-hydrocarbon sector 5.0 4.8 3.5 3.5 Source: Oxford Economics

Source: Oxford Economics (2014 figures) and CBRE Estimates / Forecasts

Non- Oil Sector % to

GDP 70%

Oil Sector % to GDP 30%

Source: Oxford Economics

MARKETVIEW

DUBAI MARKET

© 2016 CBRE Middle East | 3

UAE INDUSTRIAL & LOGISTICS MARKET

H1 2016 CBRE Research

Figure 5: Land / Ground Rentals, Selected Industrial Districts – H1 2016

0

20

40

60

80

100

120

140

160

Land

/ Gr

ound

Ren

tals

(AED

/m2 /

year

)

Source: CBRE

MARKETVIEW

© 2016 CBRE Middle East | 4 H1 2016 CBRE Research

Figure 6: Dubai Industrial Rentals (H1 2016)

100

200

300

400

500

600

700

800

2011 2012 2013 2014 2015 2016

Indu

stria

l Ren

tal R

ates

(AED

/m2 /

annu

m)

Al Quoz DIPJAFZA (Primary Market) JAFZA (Secondary)Jebel Ali Industrial Area DIC

14%

0%

14%

0%

7% 0%

21%

29%

14% Pharmaceutical

Fashion / Retailers

F&B

Telecom and IT

Oil & Gas

Construction

Logistics & 3pl

Light Industrial

Automotive

Figure 7: Dubai Industrial Enquiries (H1 2016)

Source: CBRE

Source: CBRE

0% 7%

64%

21%

7% Under 1,000 sq m

1,000-2,000 sq m

2,001-5,000 sq m

5,001-10,000 sq m

Above 10,000 sq m

Figure 8: Dubai Industrial Enquiry Sizes

Source: CBRE

UAE INDUSTRIAL & LOGISTICS MARKET

MARKETVIEW

© 2016 CBRE Middle East | 5 H1 2016 CBRE Research

UAE INDUSTRIAL & LOGISTICS MARKET

MARKETVIEW

© 2016 CBRE Middle East | 6 H1 2016 CBRE Research

UAE INDUSTRIAL & LOGISTICS MARKET

ABU DHABI MARKET

20%

20%

40%

0%

20% Under 1,000 sq m

1,000-2,000 sq m

2,001-5,000 sq m

5,001-10,000 sq m

Above 10,000 sq m

Figure 9: Abu Dhabi Enquiry Sizes (H1 2016)

Figure 10: Abu Dhabi Industrial Rentals (H1 2016)

200

400

600

800

1,000

1,200

2011 2012 2013 2014 2015 2016

Indu

stria

l Ren

tals

(AED

/m2/

annu

m)

Mussafah ICAD 1

Kizad (non FZ) ALMARKAZ

Abu Dhabi Airport

Source: CBRE

Source: CBRE

Figure 10: Abu Dhabi Industrial Enquiries (H1 2016)

Source: CBRE

Pharmaceutical 40%

Oil & Gas 20%

Construction 20%

Light Industrial 20%

Pharmaceutical

Fashion / Retailers

F&B

Telecom and IT

Oil & Gas

Construction

Logistics & 3pl

Light Industrial

Automotive

MARKETVIEW

© 2016 CBRE Middle East | 7 H1 2016 CBRE Research

UAE – INDUSTRIAL & LOGISTICS MARKET

MARKET OUTLOOK

MARKETVIEW

Disclaimer: Information contained herein, including projections, has been obtained from sources believed to be reliable. While we do not doubt its accuracy, we have not verified it and make no guarantee, warranty or representation about it. It is your responsibility to confirm independently its accuracy and completeness. This information is presented exclusively for use by CBRE clients and professionals and all rights to the material are reserved and cannot be reproduced without prior written permission of CBRE.

CONTACTS

CBRE OFFICES

ABU DHABI – OFFICE, RESIDENTIAL AND HOSPITALITY SECTOR

EMEA RESEARCH

For more information about this MarketView, please contact: