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Sat 2 Jun 2007 04:44 PM

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Boom predicted for warehouse construction

Demand for warehouse construction is set to soar over the next few years, according to Philip von Bismark, national manager of contract logistics, Kuehne + Nagel.

Demand for warehouse construction is set to soar over the next few years, according to Philip von Bismark, national manager of contract logistics, Kuehne + Nagel.

Despite the challenge of finding contractors to build the company's integrated warehouse facility at Dubai Logistics City (DLC), von Bismark is confident that the project will act as a springboard to attracting firms to build similar developments in the future.

Ten contractors, mainly local, have been shortlisted to build the company's new base in DLC. The main construction contract will be awarded in July, with construction beginning in August. Work on the project is expected to take 12 months. "Finding contractors has definitely been a challenge," said von Bismark. "We have taken the view that building this facility will be like an advertisement to contractors operating in the region. Many are building tall towers right now, but in the future we will see huge demand for warehouse construction, so we hope that our project will be value-added."

Von Bismark believes the contract would most likely be based on ‘fixed-sum' conditions. "The nature of the contract is still something that needs to be discussed, but we don't normally work with ‘cost-plus' contracts," he said.

Kuehne + Nagel became the first company to take a plot of land at DLC last September when it signed a lease agreement for an area of 52,000m2, paving the way for the development of the firm's Dubai base into its distribution facility for the Middle East. The new facility will feature 15,000m2 of logistics and warehouse space, with the option to expand to 30,000m2.

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